Halfway Point: Taking Stock of the Legislative Session and Vermont’s Affordability Challenges

Halfway Point: Taking Stock of the Legislative Session and Vermont’s Affordability Challenges

With crossover complete, the Vermont Chamber advocacy team provides a comprehensive status update on Vermont’s most pressing affordability issues—education and property taxes, housing, healthcare, and business cost and regulation. Early measures in education and property taxes show promise in easing financial pressures, while proposed reforms in housing and healthcare remain under review amid evolving priorities. Key issues are summarized below.

Education Finance and Delivery

Following an average property tax increase of 14% last year, Vermont’s education finance and delivery system has reached a critical inflection point. With a clear focus on progressivity, transparency, and local control, the Legislature is examining the Administration’s proposals, which aim to address nearly every aspect of the current education finance framework—from how property tax credits are calculated to new measures designed to reduce disparities among school districts. However, significant questions remain regarding the potential for cost containment and the methodologies that will be employed to achieve it.

  • Yield Bill Passes Ways and Means: Curbing Property Tax Hikes: The House Ways and Means Committee passed the yield bill (9-2-0), proposing a uniform change to both non-homestead and homestead property tax rates for the upcoming fiscal year. The bill uses the one-time $77.2 million general fund transfer proposed by the Administration to buy down the property tax rate to an average increase of 1.1% versus the 5.9% increase that would have been realized without the transfer.
  • Education Reform Gets More Time: Due to the complexity of education reform—covering proposed changes to district sizes, funding, governance of Centers for Technical Education (CTE), prekindergarten, and a potential shift to a foundation formula—lawmakers are expected to take additional time beyond the standard crossover deadline. These decisions will ultimately determine whether cost containment can be achieved this session.

Housing

The continued lack of affordable housing is making living in Vermont more challenging for workers and families. Thoughtful reforms—such as streamlining permitting, encouraging higher-density and mixed-use developments, and revising financing mechanisms—are needed to help stabilize prices, support community resilience, and increase housing output.

  • Housing-Focused Infrastructure Financing Gains Momentum: Public infrastructure remains a major barrier to housing development. A housing-focused version of the long-proposed project-based Tax Increment Financing (TIF) program has gained momentum in the Senate, alongside a bond bank program designed to extend and enhance water and sewer service capacity for housing in municipalities.
  • Middle Income Programs Get Policy Approval; Budget Approval Pending: Programs designed to bridge the financing gap for housing developers or homebuyers have received support in policy committees, although the final budget for these initiatives has yet to be determined.
  • Act 250 Appeals Study Expedited: The timeline for a study on Act 250 appeals was expedited to allow the Legislature to develop policy proposals in time for the next session.

Healthcare

Commercial healthcare premiums have increased by double digits over the past three years while healthcare providers continue to face staffing and funding challenges in delivering the access to care communities need; 45% of respondents to the Vermont Chamber’s Business Climate Survey have adjusted their benefits in response to rising costs—with smaller businesses feeling the impact the most.

  • Reference-Based Pricing: Reforms Under Consideration to Curb Costs: In efforts to control costs, the Senate is moving forward with a proposal to implement reference-based pricing (RBP) before phasing in global hospital budgets.
  • New Law Unmerges Markets, Double-Digit Premium Increases Likely: In a swift legislative move, Vermont’s Legislature permanently unmerged the individual and group healthcare markets—a measure signed into law by Governor Scott—to shield small businesses from the higher costs of the individual market. However, the path to addressing the underlying cost drivers remains unclear and another year of double-digit increases may be unavoidable.
  • Workforce and Demographic Challenges: Further Action Needed: While current programs remain essential, little progress has been made in developing solutions to address the growing staffing shortages and demographic shifts impacting the healthcare system. Additional proactive measures are needed to ensure long-term workforce sustainability and maintain access to quality care.

Vermont’s Business Climate

The Vermont Chamber’s Business Climate Survey revealed a stark reality: respondents consistently voiced frustration with Vermont’s business environment, citing rising operational costs, regulatory hurdles, and a lack of workforce availability. The Vermont Chamber’s focus remains aligned with what Vermonters expressed at the polls in November—addressing affordability, spurring economic growth, and tackling Vermont’s toughest challenges head-on. 

  • Military Retiree Pension Exemption Ignored: Despite strong bipartisan support in the House and Senate, legislation that would exempt the pensions of military retirees and survivor benefits from taxation has not been taken off the wall, leaving Vermont as the second least desirable state for military retirees.  Vermont’s veteran population is declining at a rate of 2.7% annually, compared to a national decrease of 1.6%.
  • Balanced Comprehensive Data Privacy Gains Traction: A Comprehensive data privacy bill has received unanimous committee approval as it moves through the Senate. While compliance with this law will carry costs, the bill aligns with data privacy standards in other New England states and avoids exposing businesses to costly legal fees by excluding a private right of action.
  • Electricity Rate Increases: Two Senate committees have advanced a bill that is raising serious concerns due to its potential to increase electric costs for ratepayers.
  • New Business Taxes and Fees Off the Table for Now: While new and increased taxes were front of mind last year, tax increases targeting Vermont businesses have been off the table thus far.

Looking Ahead: What’s Next for Affordability Policy?

As the Legislature moves into the second half of the session, many of these affordability proposals will face significant hurdles in securing final approval and funding, and things can change dramatically as bills move from one chamber to the other. Proposals that seemed settled in one committee may be completely rewritten or stalled as they face new scrutiny and ideology. Several efforts to deliver some form of affordability remain in play, but competing priorities and budget constraints will shape what ultimately moves forward. Adding to the uncertainty, federal funding fluctuations could impact healthcare, infrastructure, and workforce programs, forcing lawmakers to make difficult trade-offs. The Vermont Chamber will remain engaged at every step, ensuring that affordability remains at the forefront as these critical policies take shape.

Joint Legislative Hearing Sets Stage for Housing

Joint Legislative Hearing Sets Stage for Comprehensive Housing Solutions

The Senate Economic Development, Housing, and General Affairs Committee and the House General and Housing Committee held a joint hearing to review the Administration’s omnibus housing bill—a collaborative effort demonstrating their commitment to addressing Vermont’s housing crisis this session. The bill includes funding for infrastructure, investments in housing development programs, reforms to housing appeals, and changes to last year’s Act 250 reforms.

Legislators were keenly interested in the presentation and engaged in dialogue as well as debate, particularly with proposed changes to last year’s Act 250 bill. As the bill’s process unfolds, hearing from the groups responsible for mapping and the new Land Use Development Board will be crucial to identifying necessary corrections. This will help ensure that the bill effectively incentivizes development, protects natural resources of statewide significance, and preserves opportunities for all Vermonters to have a voice in these decisions.

These committees are unlikely to be the only ones reviewing this presentation, as land use also falls under the jurisdiction of the House Environment and Senate Natural Resources and Environment Committees. With housing being critical to addressing Vermont’s workforce and demographic challenges, this collaborative approach will hopefully continue throughout the session.

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RECENT NEWS

Landmark Act 250 Modernization Bill Becomes Law

Landmark Act 250 Modernization Bill Becomes Law

Lawmakers voted to override the Governor’s veto of H.687, marking the final passage of the historic compromise that has been a monumental undertaking for policymakers and stakeholders this session. The successful passage of the bill will immediately exempt the building of housing units across Vermont, which is a top priority for the Vermont business community. The Vermont Chamber has been engaged on this bill throughout the session to secure this crucial provision, among others.

There will be an opportunity to address the areas of concern that led to the Governor’s veto decision in the next biennium. In the meantime, the passage of this bill marks an important step forward to achieving common goals. Act 250 exemptions for housing will start immediately and a location-based jurisdiction approach will see full exemptions in smart growth areas soon. No single piece of legislation will absolve the housing crisis that has been generations in the making and more work needs to be done to find solutions that get at the root of the problem. The Vermont Chamber remains committed to working with legislators and the Governor’s administration in the years ahead on further policy solutions for Vermonters. 

Important Appeal Provisions Secured in Act 250 Modernization and Housing Bill

Important Appeal Provisions Secured in Act 250 Modernization and Housing Bill

Amid a lengthy debate and amendments, the Senate is poised to approve H.687, which will be another step towards codifying the historic agreement on location-based jurisdiction. The bill would then need to go back to the House to review changes. The bill removes barriers to residential development in smart growth areas with interim exemptions. Notably, the Vermont Chamber successfully advocated for Act 250 appeals to remain with the Environmental Court. In a compromise to secure this, the future of appeals would be studied, and a report would be due back to the legislature for further consideration in 2026.

Here is a breakdown of much of what the Senate version of the bill would do over the next 3 years:

Development Exemptions: Establishes exemptions for all development in Tier 1A up to 49 units of housing in mixed-use developments in Tier 1B. Interim exemptions include:

  • All housing within downtowns until July 1, 2028.
  • Up to 75 units in new town centers, growth centers, and neighborhood development areas until July 1, 2028.
  • Up to 50 units within ¼ mile of village centers with zoning and in urbanized areas of 50,000 people near transit routes until July 1, 2028.

Name Change and Authority Expansion: The Natural Resources Board becomes the Land Use Review Board (LURB), the five-member board will be appointed by the Governor and have the authority to hear appeals and review regional plans and maps.

Tier 1A Area Application Process: Municipalities can apply from 2026 or after regional plan approval, with LURB guidelines issued by 2026.

Review of Applications for Tier 1A: LURB to manage the workload of District Commissions. Leaves Act 250 permit appeals at the Environmental Division of the Superior Court and will further study the issue.

Act 250 Amendments: Definitions added for forest blocks and habitat connectors. Rules to be adopted for Act 250 in areas with highly sensitive natural resources administration and mapping.

Regional Planning Process: LURB to review future land use maps and Tier 1B designations. RPCs submit to LURB plans and maps which must comply with requirements. Village areas are given Tier 1B status unless the town requests not to have it.

Appeal Changes: The threshold for appeals increased from 10 to 25 people.

Taxation Adjustments: A new property transfer tax rate of 2.5% for residential properties that will not be used as a principal residence, are fit for habitation all year, and are not used for a long-term rental. A temporary education property tax exemption was introduced for flood-impacted communities.

Safety Guidance for Short-Term Rental (STR) Operators: The Division of Fire Safety provides health and safety rules guidance for STR platforms; operators are required to post guidance.

Housing and Act 250: A Historic Compromise With a Poison Pill

Housing and Act 250: A Historic Compromise with a Poison Pill

The Senate Natural Resources and Energy Committee combined the Senate’s housing bill with the House’s Act 250 modernization bill, creating a 171-page omnibus bill. While much of the legislation incorporates a historic compromise on Act 250, a substantial poison pill remains. Appeals of Act 250 permits would move from the environmental courts to a newly established professional board. The Vermont Chamber is advocating against this transition. A legal appeal of a complicated development process requires a legal review in a court, not an informal review by a politically appointed quasi-judicial board that does not have legal expertise.

The Vermont Chamber has supported a compromise of establishing a working group to dig into underlying issues that result in Act 250 appeals leading to timely and expensive disputes and ultimately development delays and how best to address them. The Senate Economic Development, Housing, and General Affairs Committee has done a walk-through of the bill and is looking at opportunities to bolster parts of the bill that will address Vermont’s housing crisis. With only weeks remaining in the session, the bill still has several more hoops to jump through before reaching the Governor’s desk. As it currently stands, it is poised for a veto.

Tourism Economy Day Brings Business and Policy Leaders Together at the State House

Tourism Economy Day Brings Business and Policy Leaders Together at the State House

Over 100 tourism and hospitality industry leaders gathered at the State House on April 11 to engage with legislators and raise awareness of the collective contributions of these industries to the Vermont economy. “Tourism Economy Day,” convened by the Vermont Chamber of Commerce and Ski Vermont, brought businesses together to advocate for a thriving Vermont visitor economy.

The Vermont visitor economy has a $3 billion annual economic impact, supports 35,000 jobs, and represents 11.5% of our workforce. Businesses, legislative leaders, and Administration officials collaborated for a day of advocacy that elevated the collective contributions of the visitor economy to Vermont. A coffee hour with Governor Scott, a joint hearing with the House Commerce and Economic Development Committee and the Senate Economic Development, Housing, and General Affairs Committee, a Resolution reading on the floor of the House of Representatives, an evening food and beverage tasting reception with the Vermont Specialty Food Association all took place throughout the day.

Rep. Stephanie Zak Jerome (Rutland-9), a stalwart supporter of the tourism industry, offered a House Resolution, H.C.R 211. “The Vermont visitor economy remains a vital engine powering our state and bolstering our businesses and local economy. This annual event provides an opportunity for industry leaders from across Vermont to testify on the importance of their work, speak directly to legislators, and elevate the importance of the tourism and hospitality sectors in the State House,” commented Rep. Jerome.

“The Vermont Chamber has a proven track record of bringing businesses together with a shared purpose to work together to build a stronger Vermont economy,” said Amy Spear Vice President of Tourism for the Vermont Chamber of Commerce. “This year’s event focused on advocating for strategic initiatives to bolster business success and contribute to the vitality and resiliency of our state: workforce development, economic recovery and resiliency, and workforce housing.”

“Outdoor recreation relies on sustaining a healthy and thriving environment and is vital to Vermont’s $1.9 billion outdoor recreation tourism economy,” says Ski Vermont President Molly Mahar. “Vermont’s ski areas understand the importance of sustainable stewardship for tourism and its economic benefit to their local communities and across the state. For decades they have worked to support and enhance the state’s capacity for outdoor recreation while protecting the environment and reducing carbon emissions. They maintain that focus so current and future generations can continue to enjoy all that Vermont has to offer.”

Business leaders centered their advocacy on three key pillars of opportunity: workforce development investments in training and education to meet industry demands, economic recovery and resiliency programs to address and anticipate economic injuries from disasters, and workforce housing solutions to meet future needs.

“Friends, mentors, and colleagues have had to shutter their businesses in the wake of recent catastrophes. It’s heartbreaking,” stated Stefano Coppola, Chef and Owner of Morse Block Deli & Taps. “While the State’s work to help businesses through the pandemic, and later the flood, was commendable, there is still much progress to be made. We need additional support so that when something like this happens again, we are more prepared to help the hospitality industry.”

“By investing in education and workforce development, we can cultivate future leaders and ensure the sustainability of our vibrant tourism economy,” stated Hans van Wees, General Manager of Hotel Vermont and Co-Chair of the Vermont Lodging Association. “Our goal is to empower high school graduates, career changers, and current industry professionals through targeted programs that bridge the gap between education and practical experience.”

Additional business and policy leaders that testified were: Charles Tino Rutanhira of the Vermont Professionals of Color Network, Jay Wahl of The Flynn, Emily Schriebl Scott of the Weston Theater Company, Andrew Stenger of Jay Peak Resort, Bob Grim of Foam Brewers, Hans van Wees of Hotel Vermont and the Vermont Lodging Association, and Heather Pelham, Commissioner of the Department of Tourism & Marketing.

Act 250 Modernization Bill Passes House

Act 250 Modernization Bill Passes House

H.687 was the subject of lengthy, and at times fiery, House floor sessions this week. The bill establishes a plan and timeline to modernize Act 250 with a tiered and location-based jurisdiction, including exemptions in smart growth areas. The proposed changes for Vermont land use would take place over the coming years to allow for considerable public outreach and input. In total, there were 11 amendments to the bill with all but one passing. This included an amendment to extend Act 250 housing exemptions passed last year in the HOME Act. The bill was ultimately passed by the House on a split voice vote, sending a message to the Senate that further changes will need to be made if the bill is to garner enough widespread support to withstand a potential veto.

The bill will now go to the Senate, where the Natural Resources Committee has been reviewing S.311, the Senate’s housing and Act 250 omnibus bill, in anticipation of receiving H.687. The Vermont Chamber testified before the committee this week in favor of the approach to Act 250 appeals that S.311 makes, keeping appeals to Act 250 decisions in the court with increased support. The committee is likely to make H.687 the final vessel for Act 250 modernization this session.

House Offers Important Improvements to Bring Act 250 Bill in Line with NRB Compromise

House Offers Important Improvements to Bring Act 250 Bill in Line with NRB Compromise

In response to stakeholder concerns on the version of the House Act 250 modernization bill that was voted out of the committee last week, the House Energy and Environment Committee has taken up an amendment to that bill. It will include important provisions related to the timeline of how Act 250 changes are implemented and is based on the significant package of compromises made by stakeholders before the session in the Necessary Updates to Act 250 report. Changes in the timeline ensure that the growth and protection provisions move in concert with each other, as agreed upon by stakeholders. The Vermont Chamber remains concerned about language that would transfer the responsibility of hearing Act 250 appeals from the environmental court to the new Environmental Review Board.

Meanwhile, the Senate Natural Resources Committee took up the “Be Home” bill, S.311, this week which was passed out of the Senate Economic Development, Housing, and General Affairs Committee with changes to Act 250, local zoning, and housing programs. Builders and developers testified regarding regulatory hurdles and housing market dynamics. They emphasized the importance of regulatory clarity and streamlined processes to expedite housing construction while ensuring compliance with environmental standards. Bill sponsor Senator Kesha Ram Hinsdale also testified, reiterating the need for evaluation of Act 250’s efficacy. In particular, she emphasized the need to incentivize development projects that cater to various income brackets, creating more diverse housing options, from affordable rentals to multigenerational housing.

When the House Act 250 bill makes it to the Senate, pulling them together will be a focus of the Senate Natural Resources Committee for much of the remainder of this legislative session. The Vermont Chamber will be engaged and at the table to ensure businesses are represented in this process.

Progress on Act 250, Housing, Now Depends on Senate

Progress on Act 250, Housing, Now Depends on Senate

The House Energy and Environment Committee has spent much of the first half of this session working on an Act 250 modernization bill. As passed out of committee this week on an 8-3-0 vote, it incorporates some of the provisions within the Necessary Updates to Act 250 report. Unfortunately, it does not yet include other important provisions from the significant package of compromises made by stakeholders before the session. These compromises were based on exemptions in smart growth areas, which are implemented alongside protections. When it is presented on the floor, Rural Caucus members have indicated that they plan to propose amendments. After passing through the House, the bill will be considered by the Senate Natural Resources and Energy Committee, along with the Senate’s version of a housing and Act 250 bill. The five Senators on this committee have the responsibility to implement changes that more effectively balance the efforts invested in this historic compromise.

While there is no single solution to Vermont’s housing crisis, modernizing land use regulations is a crucial step to encourage housing development and meet workforce needs across all income levels. The version of H.687 that the House Environment and Energy Committee approved introduces a vital framework for a tiered, location-based approach to Act 250. However, the current criteria for a smart growth area to qualify for Tier One status are too stringent, likely limiting the number of communities that can receive the exemption benefits.

Additionally, the proposed “road rule” as a new jurisdictional trigger would come into effect years before any area exemptions are approved. This timing means the road rule’s broad application could pose immediate challenges to large-scale housing development in our downtowns, villages, and neighborhood development areas. Implementing this trigger before the Tier One exemptions undermines the compromise agreed upon by stakeholders, and would add additional trigger in places where there has been broad consensus that expedited growth is necessary.

Furthermore, the bill proposes the establishment of an environmental board to decide on appeals to Act 250 decisions, shifting this responsibility from the environmental court. While having a professional board is crucial to ensuring Act 250 becomes a regulatory program that is fair, predictable, and timely throughout the state, assigning it the additional role of hearing appeals may lead to complications, as it would review decisions made by its own staff. This concern echoes the backlash from mayors, town managers, developers, housing advocates, and community leaders when a similar proposal was put forward in 2022, highlighting fears that it could complicate essential housing developments.

Building Together: A Call for Collaborative Housing Legislation

Building Together: A Call for Collaborative Housing Legislation

This commentary is by the Vermont Chamber of Commerce, the Vermont Natural Resources Council, and the Vermont Association of Planning and Development Agencies

Climate change poses a significant threat to Vermont’s natural resources, economy, and way of life. From extreme weather events to loss of biodiversity, the impacts are already evident. Simultaneously, Vermont faces an urgent housing crisis that demands swift and strategic action. Adequate and affordable housing is essential for attracting and retaining a skilled workforce, promoting economic vitality, accommodating climate refugees, and ensuring the well-being of our communities.

Elected leaders at all levels have made building more housing and protecting our environment a priority – and yet progress to comprehensively reform Act 250, our state’s landmark land use and development law, has remained elusive for a number of years, even though there have been multiple attempts. This year, after building unprecedented consensus among a number of stakeholders, we believe a compromise is available, actionable, and attainable.

Legislators can make real progress this year by passing the recommendations in the Vermont Natural Resources Board’s report on the Necessary Updates to Act 250, which was released in December 2023. This report reflects areas of common ground and outlines a framework for how Act 250 can be modernized to better protect our environment while also encouraging more housing to be built in viable locations.

Act 250, originally enacted in 1970, has played a fundamental role in shaping Vermont’s development, and these proposed updates signal a willingness to adapt to the evolving needs of our state. Following six months of work, stakeholders with different priorities, have shown a commitment to demonstrating that progress is not a zero-sum game. The solutions proposed in this report highlight the intersectionality of the challenges Vermont faces today, and offer a path forward to incentivize new housing development in and around our community centers, while better protecting Vermont’s natural resources.

With the current legislative session well underway, this report is now in the hands of Vermont’s lawmakers. Committees in both chambers have spent weeks hearing testimony on how Act 250 can be improved to more effectively support housing, environmental protection, social equity, and economic vitality. There is much more work to be done to develop legislation that meets the moment by adequately protecting our environment and advancing needed housing around the state.

By modernizing Act 250 to a location-based approach with a 3-tiered system, we can better incentivize the development of dense and resilient communities where we want growth to happen while also recognizing that certain natural areas deserve a heightened level of review. In Tier One, Act 250 would acknowledge where municipalities and state agencies are already providing appropriate oversight of development by encouraging compact housing in areas that will lead to better smart growth outcomes. The addition of a “road rule” trigger and forest fragmentation criteria in Tier Two would incentivize more compact growth that better maintains our forested and agricultural lands and wildlife habitat. Tier Three would acknowledge that there are critical natural resources that need additional review and protection when development is proposed.

We acknowledge and expect that disagreements will continue to arise throughout the legislative session. However, we firmly believe that by remaining at the table and engaging in open dialogue, we can find common ground and work together to find solutions that serve the best interests of Vermont. We can strike a balance between development and natural resource protection that allows us to find shared solutions to the housing crisis and mitigate the impacts of climate change and biodiversity loss.

The Vermont Chamber of Commerce, the Vermont Natural Resources Council, and the Vermont Association of Planning and Development Agencies recognize the urgency of addressing these issues and are committed to fostering collaboration among stakeholders. Each of our organizations brings a unique perspective to the issue and we are all committed to working toward policies that pave the way for a resilient and prosperous future for all Vermonters.

As leaders in our respective fields, we urge legislators, communities, businesses, advocates, and government agencies to remain engaged in this collective effort. The challenges we face are immense, but so too is our capacity to overcome them. Let us embrace collaboration, and work together to create a resilient, thriving future for Vermont.

About the Vermont Chamber of Commerce

The Vermont Chamber of Commerce is dedicated to advancing the Vermont economy. Trusted by the businesses that make living, working, and thriving in Vermont possible, we prioritize collaboration and uphold the core values that define our state. As the preeminent not-for-profit business organization, we advocate, build community, and provide resources for businesses statewide.

About Vermont Natural Resources Council (VNRC)

Through research, education, collaboration and advocacy, VNRC protects and enhances Vermont’s natural environments, vibrant communities, productive working landscapes, rural character and unique sense of place, and prepares the state for future challenges and opportunities.

About the Vermont Association of Planning and Development Agencies

The Vermont Association of Planning and Development Agencies (VAPDA) is the statewide association for the State of Vermont’s 11 regional planning commissions. Regional Planning Commissions (RPCs) are Political Subdivisions of the State of Vermont created by their member municipalities.  RPCs provide technical assistance to municipalities, and since Vermont does not have county governments, Vermont’s Regional Planning Commissions act as a link between municipal affairs and state government. RPCs work in fields that directly and indirectly affect the public at large: land use, transportation, housing, economic development, environmental quality, and more.