Vermont Chamber News

Governor Phil Scott delivered his eighth budget address to the General Assembly, presenting a $8.6 billion budget across all funds. The budget focuses on strategic investments, maintaining current services, and sustainable growth without imposing new taxes or fees on Vermonters. The Governor emphasized the need for disciplined budgeting, highlighting organic revenue increases as essential for lasting economic growth. Acknowledging affordability, public safety, and housing challenges, he proposed new initiatives to address each.

Despite unexpected obligations, such as FEMA match payments, the Governor stressed the importance of smart, strategic investments showcased during the post-pandemic period. The budget aligns with fiscal reality, prioritizing fundamentals, and includes ongoing workforce, economic, and community development investments. Governor Scott urged lawmakers to work collaboratively on a balanced approach, encouraging middle-ground solutions that address challenges without burdening Vermonters financially.

The Governor’s veto of a bill that would have rewritten the state’s recyclable beverage container redemption law was upheld in the Senate by a vote of 17 in favor to 13 against. A veto override would have required two-thirds to vote in favor. The vote to uphold the Governor’s veto comes despite a Democratic supermajority, signaling the possibility that more controversial policy decisions this session may not be split simply on party lines. The Governor appealed to this “middle majority” in his budget address hours following the vote, stating, “…this Legislature can help Vermont find the sweet spot, where we do the hard policy work and invest in the things that help people, without pushing them further behind, or making it too expensive for young workers to get started here, and without forcing our anchor employers out of state, or ‘Main Street’ mom and pops out of business.”

If passed into law, the Bottle Bill would have set a new trajectory for beverage container management and impacted manufacturers, distributors, and retailers alike. The bill had the potential to disrupt existing recycling infrastructure with an increase in handling fees and the required participation in producer responsibility organizations. The widened scope of the bill would have strained current systems, leading to inefficiencies and increased financial burdens on taxpayers.

As a result of a 2022 change in the education pupil weighting formula, some school districts would face a steep increase in property tax rates. To ease this transition, the law sought to protect districts from these rates impacting ratepayers all at once by capping increases on the tax rate at 5% for the next five years, even if that district experiences a homestead property tax rate increase exceeding 5%. Non-homestead ratepayers will already be paying the for 18.5% increase, but increases beyond this cap not covered by the homestead property taxpayers must be compensated by non-homestead taxpayers as well. While this cap was intended to ease the transition, it has created an incentive for school districts to raise budgets beyond what they would have absent the cap. Budgets are being presented with unprecedented increases, heavily impacting the non-homestead tax rate, hitting business owners that pay property tax and renters with large increases at a time when they are already absorbing soaring health care costs, a new payroll tax, high interest rates, and for some, staggering flood recovery costs.

As school boards begin publishing budgets reflecting, and in some cases boasting, spending sprees significantly beyond the 5% cap, legislators are reviewing their 2022 actions with the potential to curtail this high level of spending with the Chairs of the House and Means Committee and the Chair of the Senate Finance Committee issuing a letter on these increase to school boards.