A Weekly State House Recap By Maggie Lenz and Gwynn Zakov (on behalf of Atlas Government Affairs and Garnet Government Relations
Threading the Needle
On Friday, the Senate Committee on Natural Resources and Energy did something that a lot of people weren't sure was possible. The committee unanimously voted out S.325, a comprehensive bill that amends Act 181 and Act 250, and they did it right before the crossover deadline. Given just how politically charged this issue has become, that unanimous vote says a lot about the work the committee put in to get this over the finish line.
Let's be clear about what's been going on. For the past several weeks, and really the past couple of months, Act 181 has gone from a nerdy land-use policy discussion, to a full blown public reckoning. Vermonters, particularly those in rural communities, have been waking up to what the 2024 law actually means for their land, their livelihoods, and their ability to build.
A Facebook group opposing Act 181 has attracted thousands of members venting frustrations, sharing stories, and organizing. An open letter from a Northeast Kingdom real estate agent went viral on social media. The Vermont Farm Bureau has been collecting stories from rural landowners. Op-eds in VTDigger and other outlets have called the law exclusionary and argued it could devastate small farms. The tone of public discourse has been, to put it mildly, heated. And it appears the growing public outcry is factoring into the urgency lawmakers feel this session to act.
So here's where S.325 lands, and why it matters. The central theme of the bill is buying time. The bill pushes back deadlines that are either already past, or approaching faster than the LURB, municipalities, and Vermonters are ready for. The Road Rule, which would subject development at the end of roads and driveways over 800 feet to Act 250 review, gets pushed all the way to January 1, 2030. This is a significant delay from the original July 1, 2026 effective date. And the cumulative road and driveway measurement resets to that new date too. That's a big deal for rural landowners who've been sounding the alarm about this provision for months.
The interim housing exemptions that have been working well in designated growth areas are all extended to January 1, 2030 as well. That includes the 75-unit exemption in new town centers and growth centers, the 50-unit exemption near village centers, and the unlimited-unit exemption in downtown development districts. ADU and commercial-to-residential conversion exemptions also move out to 2030. These extensions have broad support because, frankly, they've been producing results. Builders responded to the certainty those exemptions created, and nobody wants to pull the rug out from under housing projects that are actually getting built.
In terms of Tier 3, where new protections for ecologically sensitive areas have generated a lot of public concern, under the bill, the LURB now has until June 30, 2028 to file final proposed rules. Act 181's development definition changes and criterion 8 amendments get pushed to January 1, 2028, with the Tier 3 area definition not taking effect until June 30, 2028. That's a meaningful extension that gives the mapping process, which has been controversial and confusing, more room to breathe.
The bill also gives the LURB new rulemaking authority to limit which of the ten Act 250 criteria actually apply in Tier 3 areas and to road development which is a significant addition that wasn't in earlier drafts. In other words, the LURB could narrow the scope of review rather than applying all criteria in every case. That's a real concession to concerns about regulatory overreach.
Now, here's the political context that makes all of this interesting. Governor Scott has been consistent and vocal. He wants a full repeal of the Road Rule and Tier 3. His administration has said that while they're encouraged by the housing exemption extensions in S.325, in essentially every other respect the bill falls substantially short of the administration's housing proposals.
But here's the reality. A full repeal was never in the cards with the current legislature. Democratic leaders, including Senate President Pro Tem Phil Baruth, have been clear that they believe Act 181 should be given time to work. Sen. Anne Watson, who chairs the Senate Natural Resources and Energy Committee, said she would consider lengthening timelines for the Road Rule and Tier 3 to give the state's mapping process more time to play out. And that's essentially what the committee delivered. It’s not a repeal, but a significant delay that pushes the most contentious provisions years down the road.
That's the compromise. And it's more significant than it might seem at first glance. Pushing deadlines to 2028 and 2030 isn't just a procedural adjustment, it's an acknowledgment that this law was moving faster than the public process could keep up. It gives the LURB time to finish mapping, refine rules, and engage with communities. It gives municipalities time to understand what Tier 1A and 1B mean for them. It gives landowners and farmers time to learn how these changes affect their property. And it gives the legislature time to revisit any provisions that aren't working before they ever take effect.
The bill also does a lot of other things. It addresses rewrites to the regional planning process, revises future land use categories, clarifies village center designations, creates a new minor amendment pathway for future land use maps, directs a study on reducing barriers from discretionary review of residential development, and appropriates $300,000 for model building plans and public engagement. These aren't headline-grabbing provisions, but they matter for getting the nuts and bolts of Act 181 implementation right.
There are going to be people on both sides who aren't fully satisfied. The Governor's office wants more. Environmental advocates may worry that too much delay risks losing momentum on conservation goals. Rural landowners who want Act 181 repealed outright will see the delays as a half-measure. That's probably a sign the committee found the right middle ground.
What the Senate Committee on Natural Resources ultimately did was thread a difficult needle. They upheld the fundamental framework of Act 181 including the tiered system, the housing exemptions, the environmental protections, while also acknowledging that the rollout was moving too fast and the public hadn't been adequately brought along. They listened to the LURB, to the Governor's office, to the Rural Caucus, to landowners, to housing advocates, to farmers, and to municipal leaders. And they produced a unanimous vote on a bill that keeps moving the ball down the field, rather than blowing the whole thing up or pretending the problems don't exist.
S.325 now heads to the Senate Committee on Appropriations, and then to the full Senate floor before crossing over to the House. When it reaches the House there will be more debates, more amendments, more negotiations. But for now, the committee deserves credit for the hard, collaborative work it took to get here, and for recognizing that sometimes the smartest reform is giving a big, complicated law the time it needs to actually work.
The Numbers Arrive
Under Act 73, Vermont is set to move to a foundation formula for education funding if the legislature ultimately adopts a new statewide district map. The law ties the two changes together. If a map passes, the formula follows. At the same time, lawmakers still have the option to decouple the two and adopt a foundation formula on its own at any time. Because a final map has not been decided, both paths remain possible.
A foundation formula represents a different way of distributing education funding. Under Vermont’s current system, school districts determine how much they plan to spend and the state raises education taxes to support those budgets. Spending decisions originate locally, and the state’s tax system adjusts to support them.
A foundation formula reverses that structure. The state sets a base amount of funding per student and distributes money to districts according to a formula. The formula increases the funding through weighted student counts that attempt to account for additional needs such as poverty or English language learning. The payment produced by that calculation becomes the base level of funding the state provides to the district. Communities can still choose to spend above that level, but within the limits established by the system.
Since last session when the formula was first introduced seriously, districts have been asking lawmakers to show what those shifts might actually look like. But until last week, those numbers were largely theoretical.
Last week, modeling created by the Joint Fiscal Office began circulating around the State House and was later presented publicly in the House Education Committee. The analysis compares current district spending with the Educational Opportunity Payment that would be generated by the foundation formula.
The model includes several caveats. It uses fiscal year 2026 data, applies simplified assumptions for some student weights, and relies on a proposed district map (a House map that has been discussed) that has not been adopted by the legislature, or even passed by the House. The analysts describe the results as illustrative rather than predictive. Even so, the modeling provides the first concrete look at how the formula redistributes funding across districts.
Many districts appear on the losing side of the ledger. The modeled Burlington/Winooski district shows a loss of about $19.7 million. Champlain Valley shows a loss of about $14.4 million. The grouping that includes Montpelier–Roxbury and Washington Central shows a loss of about $10.1 million. Essex Westford shows a loss of about $6.29 million, while South Burlington shows a loss of about $6.28 million. The Mount Mansfield and Buels Gore grouping shows a loss of about $5.48 million, and Norwich shows a loss of about $5.05 million. In Lamoille County, the modeled district that includes Lamoille South, Lamoille North MUSD A, Lamoille North MUSD B, Cambridge, and Stowe shows a loss of about $3.1 million.
There are districts that gain funding under the formula, but they are fewer in number. A southern Vermont grouping that includes Taconic & Green, Mt. Anthony, and surrounding districts shows a gain of about $5.6 million. A Windham County grouping that includes Twin Valley, Windham Southeast, Bellows Falls, and River Valleys shows a gain of about $12.2 million. In Addison County, the grouping that includes Addison Central, Addison Northwest, Mount Abraham, and Lincoln shows a gain of about $5 million. The modeling therefore does not show a gentle redistribution. It shows large swings in both directions, with many districts losing funding while a smaller number gain under the formula.
For districts that stand to lose tens of millions of dollars compared with their current spending levels, the modeling has confirmed the concerns they raised earlier in the debate. Many district leaders warned that the formula could redistribute funding in ways that would be extremely difficult to absorb locally. Seeing the numbers attached to specific districts has made those concerns much more concrete.
What the modeling has done now is shift the conversation into a new phase. For months the debate revolved around the concept of a foundation formula and what it might accomplish. Now districts are looking directly at the numbers and asking what the formula would mean for their own budgets. In Montpelier, once spreadsheets start circulating with real district names attached, the policy conversation tends to get much sharper.
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