February 3, 2025
Building the Budget and Setting the Agenda
Governor Phil Scott has laid out his budget address with a focus on housing, affordability, education, and climate change.
The Administration proposed a $9 billion budget, marking a 5% increase over last year. As expected, his proposal emphasized affordability, demographic challenges, and education reform while firmly opposing tax increases. To address affordability concerns, Scott allocated $77 million to offset a projected 5.9% property tax increase. He also suggested ending universal school meals to fully fund this tax relief, though this proposal faces opposition. His budget included a $13.5 million tax reduction package aimed at expanding credits for Social Security recipients, low-income workers, and families with children under six. Additionally, he reiterated his long-standing push to eliminate the state income tax on military pensions and proposed revisiting the costs associated with the Global Warming Solutions Act.
Public safety was another focal point of Scott’s budget. He advocated for repealing the state’s “raise the age” laws, which currently allow 18- and 19-year-olds to be treated as juveniles in the justice system, instead seeking to keep them in adult courts. He also proposed tougher laws on repeat offenders but did not include funding for additional judges or prosecutors. Throughout his address, Scott underscored what he called a pattern of “funding without fixing,” highlighting his desire to address underlying issues rather than simply allocating money. He specifically referenced the $30 million in his budget for the motel room program for individuals experiencing homelessness as an example of this approach.
On housing, Scott proposed $6 million to improve vacant rental units and mobile homes, along with $9 million for municipal infrastructure projects. Vermont is building only 25% of the housing required annually. To meet demand and alleviate the crisis, the state needs over 41,000 new homes by 2030 and 172,000 by 2050. The Administration’s omnibus housing proposal aims to tackle Vermont’s ongoing housing crisis through infrastructure funding, investment in housing development programs, reforms to housing appeals, and updates to Act 250. Lawmakers emphasized the need for input from mapping agencies and the new Land Use Development Board to refine provisions ensuring development incentives, environmental protections, and community participation. Vermont’s workforce and demographic challenges are closely tied to housing availability, which is why the Scott Administration is pushing for a coordinated legislative approach this year. This involves expanding Act 250 exemptions to encourage housing development.
A major overhaul of Vermont’s education funding formula is also under consideration. The Governor claims his plan would create a more equitable and sustainable system while reducing overall spending by $183.6 million. The proposal would establish a foundation formula that provides a baseline funding amount of $13,200 per student. The potential impacts on local education funding and property taxes are still unclear. More on the budget here.
Reasons to Repeal: Energy Legislation Proposed in Montpelier
The Vermont Global Warming Solutions Act (GWSA), enacted in 2020, mandates a 26% reduction in greenhouse gas emissions by 2025 (compared to 2005 levels), a 40% reduction by 2030 (compared to 1990), and an 80% reduction by 2050. Vermont already faces a lawsuit for failing to make the mark. If a state superior court judge rules against Vermont, the Agency of Natural Resources could be legally compelled to implement the Vermont Climate Action Plan (CAP), which is a 265-page document outlining 26 pathways, 64 strategies, and 234 specific actions, many of which require substantial funding from the legislature. Bills H.52 and H.62 seek to repeal these binding mandates, allowing the Vermont Climate Office and the Public Service Department to focus on practical emissions reductions rather than responding to litigation driven by special interests.
The Clean Heat Standard (CHS), developed under Act 18, is the most complex and costly regulation ever proposed for Vermont’s heating sector. The Public Utility Commission’s (PUC) second Checkback Report warns that CHS is expensive and challenging to implement, recommending that the Legislature find a more practical, cost-effective alternative. The CHS is projected to cost nearly $1 billion over the next decade. Heating fuel prices could rise by 58 cents per gallon. None of these estimates include the “participant costs” paid by Vermonters when installing a “clean heat” measure. The Equity Advisory Group (EAG) found that low and moderate-income households, renters, and mobile home residents will struggle to afford clean heat measures while bearing a disproportionate share of the costs. Even those receiving fuel assistance could see their benefits reduced. The regulation also requires a trading platform, credit verification, administration, and enforcement. These costs remain undetermined. A repeal is essential because the Clean Heat Standard (CHS) remains embedded in the Vermont Climate Action Plan. Without legislative action, a court ruling could impose this costly regulation on Vermonters. H.16 repeals the CHS, eliminating related regulations and state agency positions.
Back in 2022, Vermont adopted California-style vehicle mandates requiring 35% of new cars delivered to Vermont in 2026 be electric, increasing to 100% by 2035. These targets are unrealistic. Automakers admit it would "take a miracle" to meet them. In 2024, only 12% of new vehicles sold in Vermont were electric, and nearly all of them light-duty vehicles. If manufacturers fail to meet quotas, they must buy credits—mostly from Tesla—and pay up to $26,000 per gas-powered vehicle exceeding the cap. This could result in fewer cars shipped to Vermont, reducing consumer choice, harming local dealerships, and reducing tax revenue to the state. The truck mandate is worse. According to the rule, 50% of all new Class 2b-8 trucks sold in Vermont must be zero-emission by 2030. Less than 1% of trucks are electric. They cost 2–3 times more than diesel, offer shorter range, and carry 8,000 pounds less payload, requiring more trips, more drivers, and more road wear. No commercial charging infrastructure exists, making widespread adoption infeasible. H.65 revokes Vermont’s adoption of California’s vehicle emission mandates, preventing state regulators from enforcing stricter-than-federal standards.
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News of Note
The Federal Motor Carrier Safety Administration (FMCSA) extended the Regional Declaration of Emergency. The waiver now applies through February 15, 2025, allowing those transporting heating oil, propane, gasoline, and diesel to spend more time on the road. Access the new waiver here and keep it in your truck.
The unemployment rate in Vermont was just 2.4% in December, which is significantly lower than the national rate of 4.1%. Barriers to employment, such as available housing, have slowed the growth of Vermont’s labor force. Experts say Vermont needs 7,000 new housing units every year. Due to the lack of supply, the median home price has increased by 43% in just four years, and a quarter of renters spend half their income on housing.