By Shouldice & Associates
Governor Phil Scott proposed a $9.4 billion budget to the Vermont General Assembly on Tuesday. He called his proposal a “disciplined” spending plan in the face of waning support and more cuts likely to come from the federal government.
The Governor outlined a plan centered on three priorities: growing the economy, improving affordability, and protecting the most vulnerable Vermonters. The budget emphasizes fiscal restraint in the face of downgraded revenue forecasts and rising costs, including a 9.7% increase in pension expenses requiring $331 million from the General Fund.
Major investments include $105 million in property tax relief to address a 41% increase over the past five years, largely driven by education spending. The Governor also proposed nearly $1 billion over five years for rural health care, focusing on expanded insurance options, reinsurance, affordability, and value-based care. Housing remains a key priority through continued funding for successful programs like VHIP, permanent housing investments, and regulatory modernization to increase supply and stabilize prices.
To manage budget pressures, the Governor proposed targeted reductions and structural changes. In transportation, declining fuel tax revenues prompted opposition to a gas tax increase and a proposed $10 million reduction in the purchase and use tax transfer from the Transportation Fund. In education, the Governor called on school districts to control spending growth and suggested exploring an education spending cap.
The address also proposed modernizing housing regulations by repealing restrictive road rules, extending housing exemptions, and expanding downtown and village tax credits. On energy policy, the Governor advocated for achieving affordable, 100% clean energy by 2030 by leveraging solar, hydro, and nuclear power, while criticizing prior policies that increased costs.
Public safety proposals included repealing “raise the age” for 19-year-olds, allowing violent juvenile offenders to be prosecuted in criminal court, expanding pretrial supervision, and scaling accountability court models statewide. Increased funding for mental health, addiction treatment, and recovery services was also emphasized.
Additional initiatives included agricultural fee reductions, investments in the outdoor economy, support for UVM’s new multi-purpose center, and targeted use of federal funds for housing, broadband, weatherization, and flood mitigation. The legislature now faces the challenge of weighing these proposals to balance fiscal responsibility with affordability, public safety, and long-term economic growth.
*********************
VDPA / AAFM
While the Governor’s budget address typically remains high level, he specifically highlighted the proposal to eliminate LFO/MFO permit fees. The intent of this change is to streamline the permitting process and reduce costs for farms, particularly those that are also subject to CAFO fees. We anticipate this proposal may be included in a miscellaneous bill, and it will be important for VDPA to be prepared to express strong support as the measure advances.
This week, the Vermont Dairy Producers Association spent time at the Statehouse meeting with members of the House and Senate Agriculture Committees. Discussions focused on the recent Vermont Supreme Court ruling related to municipal regulation of farms, as well as broader updates on the challenges currently facing the agricultural sector. Continuing to educate legislators about who produces Vermont’s food and milk remains essential. Ongoing engagement by VDPA and its members will be critical to ensuring agricultural priorities are recognized and not overshadowed by opposing interests.
LCAR – Neonicotinoid Best Management Practices
Vermont’s Legislative Committee on Administrative Rules (LCAR) has advanced the state’s new Best Management Practices (BMPs) for neonicotinoid‑treated seeds and neonicotinoid pesticides, a key step in implementing Vermont’s broader neonicotinoid restrictions under Act 182. The rule package establishes standards governing the use, storage, and management of neonic‑treated seeds and neonic pesticides within Vermont’s agricultural landscape.
Approval of these rules moves the state closer to fully implementing the phased‑in neonicotinoid bans and exemptions scheduled to take effect beginning in 2025 and continuing through 2029. These changes will significantly influence how farmers, beekeepers, and regulators approach pollinator protection and pest management in the coming years.
Municipal Agricultural Exemption
The Vermont League of Cities & Towns supports retaining agricultural exemption in cities and towns, in a round-about way.
VLCT will only support the exemption in certain agricultural activities from municipal zoning. The proposal would not allow the exemption under Act 250 in Tier 1a areas due to the importance of creating Act 250 exempt areas (Tier 1a) to support community-driven growth plans that align with state and regional housing and development goals.
The full transcript of the Governor’s Budget Address is attached.