Republished from the Lake Champlain Chamber advocacy newsletter
The $9.38 billion state budget (H.951) for fiscal year 2027 was passed in the final hours of the 2026 legislative session, representing a modest 2.9% increase in spending. This budget reflects a period of relative fiscal discipline as the state navigates the end of “abundant” pandemic-era federal funding.
Key Appropriations
- Property Tax Relief: Lawmakers deployed $101 million to $105 million in General Fund surplus and reserves to “buy down” projected education property tax increases to an average of approximately 3.5%.
- UVM Athletic Complex: Negotiators agreed to provide $12 million for a 5,000-seat multipurpose sports facility at the University of Vermont. This was funded through a compromise: $2 million from the Higher Education Endowment Trust Fund and $10 million from an unexpected windfall in unclaimed financial property.
- Business and Economic Support: The budget preserved vital growth tools, including funding for Small Business Development Centers, the Small Business Law program, and $2 million for the Rural Industry Development Program.
- Housing and Homelessness: The budget maintained $21.2 million for the homelessness response continuum, focusing on the transition from motels to permanent shelters.
- Public Safety: Earmarks included $500,000 to expand “accountability courts” to clear backlogs of repeat offenders and funding for State Police and Sheriff overtime.
Property Tax Relief & Education Finance – H.949 & S.220
The Surplus Buy-Down: To counter a 40% spike in property taxes over five years, lawmakers deployed the entire $104.9 million General Fund surplus in a single year. This brought down the average property tax increase to 3.5%. This was the Governor/Senate approach, as opposed to the House plan, which wanted to spread the funds over two years. Other tax and education funding decisions include:
- Cost Containment: Ramps down the “excess spending threshold” (which double-taxes high-spending districts) from 118% down toward 112.5%–113% by FY 2032.
- Renter & Circuit Breaker Credits: Expanded the renter credit for one year (raising the cap to $3,250 with a $4 million injection) and increased the “circuit breaker” property tax income threshold from $47,000 to $50,000.
- Education Transformation: There are numerous provisions in the education transformation bill H.955 that further the implementation of Act 73 tax provisions; a new “nonhomestead residential” tax classification was introduced to target second homes and short-term rentals at a separate, higher rate, alongside regional assessment districts.