by Maggie Lenz and Gwynn Zakov (on behalf of Atlas Government Affairs and Garnet Government Relations)
Hit Me With Your Best Cap
S.220, a bill that would temporarily cap how much school districts can increase their budgets, got a full walkthrough in Senate Finance late last week. It was introduced by Sen. Phil Baruth (D/P, Chittenden Central), who serves as Senate President Pro Tempore. He first floated the idea in his opening day address. If enacted, it would cap education spending growth for every school district in fiscal years 2028 and 2029. Each district would be assigned an “allowable growth percentage” based on how its per pupil spending compares to the highest-spending district in the state. Lower-spending districts could grow more. Higher-spending ones would be capped at 3 percent. The cap is strict. Districts would not be allowed to adopt budgets above their assigned level.
The formula behind it is “relatively” simple (which, in Vermont education finance, still means it’s complicated). Each district would get what’s called an “allowable growth percentage,” based on how its per pupil spending compares to the highest-spending district in the state. Lower-spending districts would be allowed to grow more. Higher-spending districts would be capped closer to 3 percent. The idea is to create a sliding scale that gives more breathing room to systems that need it, while slowing growth at the top. No district would get less than 3 percent, and most would fall somewhere between 3 and 9.
A lawyer from Legislative Counsel, the nonpartisan legal team that advises lawmakers, walked the committee through the bill and flagged some concerns. Because the cap lets some districts spend more while limiting others, it could raise questions under Vermont’s Constitution, which guarantees equal access to educational opportunity. Several senators also pointed out that health care, special education, and labor costs have all risen well beyond 3 percent. One asked whether this bill addresses cost pressures or just puts a lid on them.
Preliminary estimates from the Joint Fiscal Office suggest the cap could reduce education spending by about $67 million if applied in FY27. That would be about 2.7 percent of the Education Fund. Lawmakers acknowledged that even modest savings could help soften the tax impact, especially as General Fund dollars become harder to find. At this point, that is barely even a question. The money is drying up. Has dried up. Scraping together another buy-down means pulling from other priorities.
Sen. Ann Cummings (D–Washington), who chairs the committee, said continued reliance on the General Fund is already squeezing out other needs. “We’ve been putting $100 million a year in from the General Fund,” she said. “That’s money we haven’t had for the food banks or housing… and we’re not adequately funding our mental health agencies, which schools need.” She added that the Transportation Fund is also in serious trouble. “The Transportation Committee would like the purchase and use tax revenue back. They also would like sales tax on automotive parts back. They never had those, but they would like them, and they are in serious financial trouble over there.”
School boards are already facing hard choices. Many are cutting staff. Voters are bracing for sharp increases in their property tax bills. And the Legislature is entering a session with fewer tools and more pressure than at any point in recent memory. Deep breaths, everyone.
Low Hanging Fruit to Higher Branches
Housing has had serious staying power in Vermont politics over the past five years. It's one of those rare issues that actually keeps getting legislative attention year after year. If you walked through the State House hallways this first week of session, you heard plenty of chatter about housing policy, state investments, and the path forward. Sure, there's no magic bullet for complex problems (just look at the endless education reform debates), and Vermont faces plenty of headwinds on housing starts. But there's real political momentum here that doesn't seem to be going away anytime soon.
Pretty much every committee with jurisdiction over the issue touched base on housing and land use issues during the first week back. House General and Housing, Ways and Means, Commerce and Economic Development, Environment, and Senate Natural Resources all jumped right in. The new Land Use Review Board came by to update everyone on how they're implementing last year's Act 181 and the recent Act 250 reforms. They covered a lot of ground: future land use mapping at town and regional levels, Tier 1A timelines, Tier 3 rulemaking, the "road rule," various required reports, and everything in between. The Board seems pretty upbeat about their progress. They're just asking for a few deadline extensions, nothing major.
But some legislators are getting worried about the level of outreach, especially to rural landowners who might get caught up in the new mapping and Tier 3 designations. Rural legislators in particular are raising concerns about whether affected property owners are getting proper notice. And then there's the "road rule" set to kick in on July 1. Any road or driveway over 800 feet (or combined driveways over 2,000 feet) will fall under Act 250. Once folks started mapping out what this actually means, it became clear we're talking about hundreds of thousands of acres across the state. There's already a repeal bill in the House, and momentum is building to take another look at this provision.
Beyond Act 250, there's been a flurry of housing legislation recently: Act 181, the HOME Act, Act 69, just to name a few. Legislators heard from tons of stakeholders last week about how these laws are actually working on the ground and where to go next. The wish list is extensive: better use of tax-exempt bonds and treasury funds, targeted subsidies, streamlined permitting, workforce development. Several groups are pushing for more technical assistance to help nonprofits navigate federal funding changes and strengthen state grant systems — basically, spend a little now to save money and preserve services down the road.
ANR's permitting capacity came up repeatedly. If we're serious about more housing, the agency needs resources to handle the permit volume. Some folks pointed to inconsistent treatment across Act 250 district offices as another bottleneck. The menu of options is huge if we get creative (and find the funding and political will, of course). We've grabbed some of the obvious low-hanging fruit already. Now Vermont needs to fine-tune its approach if we really want to see progress. The state budget and taxing capacity will play the biggest role in where the legislature heads this session, and once the Governor delivers his budget on January 20, the negotiations between the administration and the legislature's path forward will become clearer.
Vermont Business Magazine
To support vital journalism, access our archives and get unique features like our award-winning profiles, Book of Lists & Business-to-Business Directory, subscribe HERE!
