By Steve Deal

Vermont’s new Community Housing and Infrastructure Program – CHIP – arrives at a moment when nearly every town in the Green Mountain State is searching for ways to address housing shortages and aging infrastructure. 

The program has been greeted with bipartisan enthusiasm. It passed the Senate unanimously and was signed into law by Governor Phil Scott, who praised it as a major step toward unlocking up to $2 billion in public infrastructure investment by 2035.

That kind of consensus is rare in Vermont politics, and it reflects a shared recognition that our housing crisis is real.  Communities across the state have brilliant projects waiting in the wings – ideas for new housing that never quite move forward because the basic infrastructure simply isn’t there.  CHIP is designed to fill that gap.

The concept is straightforward: towns can borrow for infrastructure today and repay those costs later using the future increase in the education portion of their property-tax base.  The program is even simpler than earlier mechanisms such as Tax Increment Financing (TIF) – a tool that allowed municipalities to designate special districts, build infrastructure, and then use the future growth in property-tax revenue within those districts to repay the initial investment. 

CHIP takes that same principle but removes the district boundaries and administrative layers, making the process available to any community with an eligible housing project. 

For smaller municipalities without extensive planning staff, that flexibility feels long overdue. CHIP’s advocates believe it will help Vermont meet one of its most urgent needs – more housing for working families, seniors, and young Vermonters who want to stay. 

And they are right that the state cannot simply wait for the market to fix the problem. In many communities, the lack of modern infrastructure and popular support for debt structures has kept new construction out of reach.  CHIP gives local governments a tool to finally act.  As one city manager recently stated, “it is almost negligent not to step up.” 

But while the idea is universally appealing, there are hidden costs worth understanding.  

Like any program that borrows against the future, CHIP assumes that the future tax base will grow enough to repay the debt.  That assumption may hold in some towns and yet fail in others. The program funds the physical groundwork for new housing, but it does not pay for the ongoing costs that come with a larger population – public safety, emergency services, road maintenance, and schools.  Those responsibilities remain with local budgets and could become state-wide burdens.

This is exactly where a distinction might become the difference: housing growth and economic growth are not the same thing. 

Housing growth increases the number of residents, whether working, retired, or on fixed income – while economic growth strengthens the ability of a community to sustain them.  CHIP focuses on one side of that equation – housing – but says little about the other.  

If a town adds housing without also attracting jobs, commerce, and industry, the tax base may not grow fast enough to cover the new service-based obligations that follow.

Because CHIP draws its repayment funds from the education portion of the property tax, it also touches the broader statewide education fund.  If the expected growth does not materialize, the shortfall will not disappear.  It will surface later as pressure on the education fund – potentially requiring higher statewide property-tax rates or reduced flexibility in future school budgets.

CHIP may strengthen infrastructure today, but in doing so, it also pledges a portion of tomorrow’s education revenue.

Supporters say these risks are outweighed by the benefits: stronger communities, modernized infrastructure, and the chance to expand Vermont’s housing stock.  And they aren’t wrong. 

Those outcomes are certainly possible – but they depend on disciplined execution and careful oversight.  They depend upon the most basic principle of debt, or deficit spending: whether the targeted vehicle is a true investment, or not. 

The first towns to use CHIP will set the pattern for the rest of the state.  Their experience and leadership will determine whether the program delivers on its promise or leaves future taxpayers carrying unexpected burdens.

Governor Scott’s signature and our Legislature’s strong support give CHIP a strong political foundation.  The program’s success will depend on how well Vermont balances the immediate need for housing with the slower, steadier work of building a growth economy to support it.

In the end, CHIP represents both opportunity and obligation. It may help towns grow in ways that have been impossible for years – but it may also mortgage a portion of our future to do so. We need to remember, and plan accordingly, to make this bet count. 

Steve Deal is a retired naval officer and combat veteran and last served as deputy chief of staff to the Secretary of the Navy.  He resides with his family in St. Albans, Vermont.