Taxes

On October 7th, the Vermont Chamber convened legislators and business leaders from across the state for a full-day policy retreat focused on strengthening two of Vermont’s cornerstone industries: manufacturing and tourism. The event focused on aligning state tools, programs, and regulations to better support and grow these sectors, both of which are vital to Vermont’s long-term economic vitality and competitiveness.

With a tight state budget and continued uncertainty around federal funding, a solutions-focused discussion emerged on how to better leverage existing programs, streamline administrative and regulatory processes, remove outdated barriers to growth, and develop a skilled workforce. Participants emphasized the importance of increased collaboration and practical reform as essential to maintaining competitiveness and fostering innovation across industries.

The connections forged during these retreats will guide cooperative, results-driven reforms that strengthen Vermont’s economy while protecting affordability for employers. The insights gained from these conversations will also help inform the Vermont Chamber’s advocacy work in the upcoming legislative session.

Vermont’s fiscal challenges require progress through smart reform and efficiency, not through added costs for families and employers. To move forward, the state must maximize the impact of existing resources, reduce redundancies and roadblocks, and lean into efficiency, maximizing the impact of existing resources, reducing redundancies and roadblocks, and foster growth through strategic investment and meaningful reform.

Last week, the Joint Transportation Oversight Committee met to confront sobering projections for Vermont’s Transportation Fund and a recission plan for current reduced FY26 estimates. The fund is facing a widening deficit that may require cuts to core programs and critical maintenance, with consequences for road quality, safety, and the economy.

According to the Joint Fiscal Office, transportation revenues are projected to grow at just 1.6% in FY26, well below the projected rate of inflation. Structural challenges drive this stagnation: fuel taxes are tied to consumption, and greater vehicle efficiency and electric vehicle adoption exacerbate this decline in revenue. Tariffs on steel and other construction materials are also inflating costs, and a projected $33.4 million shortfall by FY27 for federal matches could put an additional $163 million in federal dollars at risk.

On the current trajectory, the state could see 60% of roads in poor or very poor condition by the end of the decade. Paving, which is the most reactive to swings in funding, already fell to a historic low of 135 miles in FY25, far short of the 300 needed yearly to maintain system health and the 243 miles per year average for the past five years.

This issue affects far more than just drivers. Poor road conditions hurt Vermont’s visitor economy and increase costs for manufacturers dependent on reliable shipping.

The Transportation Fund challenge is a stark example of the reality every agency will face in the near term if Vermont does not change its long-term projections. With resources tightening and Vermonters already struggling with affordability, higher taxes are not a viable solution. Instead of cycling between program cuts and tax increases, Vermont can pursue a more sustainable path: growing opportunity and revenue through economic vitality. The Vermont Futures Project’s Economic Action Plan provides a roadmap to expand the economy, strengthen the workforce, and ensure long-term sustainability.

Governor Scott issued an Executive Order last week taking meaningful steps to address Vermont’s housing shortage by targeting regulatory and permitting challenges slowing development and driving up costs.

The Governor’s Order will:

• Allow builders to comply with 2020 or 2024 Residential Building Energy Standards.
• Halve discretionary permit review timelines for qualifying housing projects.
• Grant priority to residential, multi-family, mobile home, and shelter projects in the permitting process
• Grant automatic permit approval if agencies miss statutory or regulatory deadlines.
• Allow developers to pursue concurrent permitting across state agencies.
• Defer permit fee payments and reduce fees applicable to affordable housing units.
• Pre-map Class II wetlands in growth areas and reduce associated buffer zones.
• Assign teams to coordinate review of multi-family and mixed-use housing projects.
• Establish an inventory of underutilized state-owned land for housing development.
• Extend the Brownfield Economic Revitalization Alliance program to support housing redevelopment.

It will now be incumbent upon the agencies historically charged with regulating these processes to implement the Governor’s directives with consistency, transparency, and a commitment to meaningful progress. While legislative action remains essential, this Executive Order reinforces a message the Vermont Chamber has long championed: Vermont cannot address its housing crisis without thoughtful regulatory reform at all levels of government. Permitting delays, inconsistent timelines, and an unpredictable process constrain housing creation, limiting Vermont’s ability to meet workforce housing needs. Allowing developers to deliver projects more predictably without sacrificing environmental or safety protections will make building housing easier, faster, and more affordable.

As Vermont businesses continue to face workforce shortages and recruitment difficulties driven by limited housing availability, the Vermont Chamber remains focused on advancing policy and regulatory changes that remove barriers and accelerate smart, community-centered housing development.