By Matt Cota
In Montpelier, the legislative session is underway, and housing remains front and center. As Vermont works toward a goal of 40,000 new housing units by 2030, lawmakers this year face a central question: will recently enacted tax reforms and infrastructure tools finally translate into shovels in the ground?
The cornerstone of the state’s long-term housing strategy is the new Community and Housing Infrastructure Program (CHIP). Established under Act 69, CHIP is a first-of-its-kind, housing-specific tax increment financing tool that allows municipalities to borrow against future property tax revenue to cover the high upfront costs of public infrastructure—such as water, sewer, and roads—that often stall new development. With capacity for up to $2 billion in investment over the next decade, CHIP is designed to unlock “missing middle” and affordable housing in both rural and urban communities.
Governor Scott recently took an additional step to reduce construction costs by issuing an executive order allowing builders to use 2020 energy standards rather than newer, more expensive requirements. The change is estimated to save roughly $12,000 per home—an important consideration as lawmakers look for ways to improve housing affordability without new subsidies.
Housing is just one of several affordability challenges greeting legislators as they return to the Statehouse. Education taxes remain a major concern. Without a state subsidy, education property taxes could rise by as much as 12% in 2026. That follows a five-year period in which property taxes increased by more than 40%, even as K–12 enrollment has declined by roughly 16% over the past two decades.
Health care costs continue to strain household and business budgets. Vermonters now spend nearly 20% of household income on health care. For small employers, the impact is especially acute: a silver-level health plan covering five employees costs more than $8,500 per month in Vermont, compared to roughly $5,000 in neighboring New Hampshire.
Transportation funding presents another looming challenge. Vermont’s Transportation Fund faces a structural deficit, and by FY27 the state could experience a $30–$35 million shortfall in matching funds—potentially putting up to $220 million in federal infrastructure dollars at risk. Lawmakers are expected to consider legislation later this session to redirect a portion of the Vehicle Purchase & Use Tax back to road and bridge maintenance.
| The combined federal and state tax on gasoline sold will be 50-cents per gallon in the first quarter of 2026. Most of the money goes directly to maintaining and improving our roads, bridges, and transportation infrastructure. There are also fees on electric vehicles that pay for EV infrastructure. Learn more about the Vermont gas tax, diesel tax, and EV Infrastructure fee here. |
| California Dreaming Vermont’s web of vehicle emissions regulations may finally get sorted out in 2026. Way back in 2012, the state adopted California’s Advanced Clean Cars (ACC I) regulation, which applied to vehicle model years 2015 through 2025. More stringent than federal standards, the first ACC encouraged automakers to reduce tailpipe emissions and sell vehicles that burn less gasoline, while also increasing sales of electric and plug-in hybrid vehicles.ACC I was later replaced in California and Vermont by the Advanced Clean Cars II (ACC II) regulation, which requires automakers to sell increasing numbers of battery-electric vehicles beginning in 2026 and ultimately bans the sale of new internal combustion engine vehicles by 2035. However, Governor Phil Scott issued an executive order directing state agencies not to enforce Vermont’s ACC II sales mandates through December 31, 2026.And then last summer Congress approved — and President Trump signed — a Congressional Review Act resolution overturning the EPA waivers that allowed California and other states, including Vermont, to adopt EV mandates. Vermont’s Attorney General has since joined a multi-state lawsuit seeking to preserve that authority.As a result, it remains unclear whether Vermont reverts to federal standards or the prior ACC I framework. That decision will directly affect which vehicles can be sold and registered in Vermont. For example, the 2026 Ford Escape, Lincoln Corsair, Dodge Durango R/T (392), and Durango Hellcat meet federal standards but do not have ACC I certification. At a recent meeting of the Vermont Climate Council, the Agency of Natural Resources signaled its intent to pursue rulemaking to continue enforcing the prior ACC I standard rather than defaulting to the less stringent federal rules. When that occurs — and how it interacts with ongoing litigation — remains unresolved. |
The author is principal of Meadow Hill Media, a Vermont advocacy organization active in the Vermont State House.