By Maggie Lenz and Gwynn Zakov
Every day last week, the House Commerce Committee heard hours of testimony on S.71, the comprehensive data privacy bill that has been sitting on the House wall for more than a year after the Senate passed its version unanimously last session, modeled on Connecticut. The House is now working from a substantially different draft that layers in new combinations of definitions and restrictions that have not been widely tested in other states.
There was no shortage of voices. Witnesses ranged from national advocates to health care leaders, retailers, and nonprofit organizations. One point of agreement cut across nearly all of them. In a perfect world, Congress would set a single national standard to avoid a patchwork of state laws. In the absence of that, there was also broad agreement on the goal, which is strong data privacy protections for Vermonters. Where the split emerges is over how to get there.
As described throughout the week, the practical effect is about how Vermont organizations handle everyday interactions like email lists, loyalty programs, patient communications, and basic digital outreach and advertising.
On Thursday, the Vermont Chamber told the committee it supports comprehensive data privacy reform but urged lawmakers to stay aligned with regional frameworks already in place in states like Connecticut, New Hampshire, and Rhode Island. It warned that a patchwork approach carries real cost, pointing to estimates in the billions nationally and significant compliance costs even for mid-sized businesses. The Chamber also submitted a sign-on letter backed by more than 100 Vermont businesses and organizations, reinforcing that message and raising concerns that the House draft departs from those regional models and introduces untested definitions and standards that would be difficult to implement in practice.
By Friday, that concern was echoed from a different sector. Jessa Barnard, testifying on behalf of a coalition of Vermont health care organizations, supported the Senate version and opposed the House draft. Her testimony focused on how the bill would interact with existing federal privacy law. Health care providers are already operating under HIPAA and related federal standards, and she argued the House approach would layer a second, not fully aligned system on top of that. The result, she said, would be confusion for patients and significant new compliance costs for providers, particularly smaller organizations already under financial strain.
Advocates for the House draft, including national privacy groups and VPIRG, argued the moment calls for a stronger standard and more limits on how data can be collected and used, particularly when it comes to sensitive information.
The concerns raised by businesses, nonprofits, and health care organizations focused on how the House bill is structured. Testimony repeatedly pointed to the expansion of what qualifies as sensitive data, including categories that could be interpreted broadly. The House proposal also moves toward outright prohibitions on certain targeted advertising and data collection practices, rather than the consumer consent-based model used in most states. Rep. Tony Micklus (R-Milton) captured that tension in a question he posed to multiple witnesses who supported the House draft, asking why they favor a model that does not give Vermont consumers the option to opt out and instead removes that choice altogether.
The House Commerce Committee has a scattering of witness testimony again this week, along with unscheduled placeholders later in the week, but as of Monday morning there is no scheduled time for markup or a vote on any bill. If the committee hopes to advance something before the clock runs out, it will need to come together quickly. The version that passed the Senate unanimously would likely earn the Governor’s approval. But given the Governor’s past veto of proposals similar to what the House has been considering, and with the session clock running, the question now is whether anything crosses the finish line this year at all.
The LOT Squeeze
When the Senate passed H.933 last week, the headline was that the legislature’s miscellaneous tax bill had cleared the chamber. The story underneath the headline was a floor amendment from Senator Becca White (D-Windsor) that would shift the local option tax (LOT) revenue split from 25/75 to 20/80 in favor of municipalities. If the amendment survives, host communities would keep eighty cents of every LOT dollar collected, with twenty cents flowing to the State. Five percentage points is the latest data point in a longer trend that anyone watching municipal finance in Vermont has been tracking for years, and the trend tells a story about pressure that the State House is, slowly and unevenly, beginning to acknowledge.
Local government in Vermont funds itself almost entirely through the municipal property tax. Roads, culverts, libraries, zoning, the fire department, police, EMS, the town clerk, parks, recreation, town listers, the highway garage – in most communities these things are almost entirely paid by the line on your tax bill marked “municipal.” That municipal line shares the same property with another, much larger line marked “education.” The two lines compete for the same taxpayer’s tolerance.
For most of the last decade, the education line has done all the growing. Statewide education property taxes have risen 40 percent over the past five years, according to the Joint Fiscal Office. Whatever space exists on a Vermont property tax bill before residents reach for the pitchforks has been almost entirely consumed by education. That leaves selectboards and city councils with a brutal political problem. They see the road that needs paving, the fire truck that needs replacing, the employee they cannot afford to hire. And they know that the second they raise the municipal rate to address any of it, that increase lands on top of an education increase the town did not control, in a year when the state budget is sending less help, not more, to local government. The municipal property tax has become the thing towns are afraid to use even when they need it most.
This is the squeeze, and the LOT exists, in significant part, to relieve it. A community votes to add one penny on top of the state sales tax, the meals and alcohol tax, or the rooms tax. The dollars come back, after the state’s share, to be spent on municipal services only, which state statute is explicit on. Crucially, much of the burden falls on visitors rather than residents: the meal eaten by the tourist, the room rented by the leaf peeper, the gear bought at the ski shop. For a community with the right tax base, the LOT is one of the only tools available to fund municipal needs without leaning further on a property tax that is already buckling.
The Legislature has slowly recognized this. For most of the LOT’s history, the standard split returned 70 percent of the revenue to the host municipality and sent 30 percent to the PILOT Special Fund. That 30 percent was a meaningful drag, and the Vermont League of Cities and Towns pushed for years to move it. In 2025, the Legislature agreed to a 25/75 split. Senator White’s amendment last week pushes the line again, this time to 20/80. The Legislature is slowly conceding that the math at the local level no longer works on old assumptions.
There’s another recent shift worth noting. For most of the LOT’s history, a town that wanted to adopt one had to either qualify under the Act 60 “Gold Town” carve-out or go through a charter change, which required legislative approval. That changed in 2024, when the Legislature gave every municipality the authority to adopt a LOT by majority vote, no charter amendment required. Fifty Vermont municipalities have adopted at least one LOT, a number that’s grown sharply since the change. The Senate’s willingness to layer a further revenue share bump on top of an already expanded universe of LOT communities is not a coincidence. It is recognition that the tool the Legislature unlocked is now doing real work, and that helping municipalities keep more of what they collect is one of the few ways the State House can offer relief without writing a check.
The proposal may or may not survive in the House. The House did not include the change in its version of H.933 and may resist a further reduction in PILOT revenue at a moment when the General Fund and Education Fund are already under historic strain.
Even if the 20/80 split becomes law, the harder problem is the one the LOT cannot solve by itself. Vermont’s smaller, more rural towns, the ones with no hotels, maybe one or two restaurants, and perhaps a general store, have little to tax. A penny on a sales base that barely exists generates very little revenue. There is one piece of the LOT that does reach these towns, but it cuts in an uncomfortable direction. Since the Wayfair decision, the sales tax applies to most online purchases delivered into a municipality. A rural town with a sales LOT can capture a penny on every package that lands at the end of a dirt road. It is real revenue, but the people paying it are almost entirely the people who live there. It is still a tool a town can choose, and some have, but selectboards in communities where residents already feel over-taxed are right to weigh it carefully. The communities that need municipal property tax relief the most are precisely the communities that benefit least from the version of the LOT that falls on visitors. Tourism heavy towns and population centers can lean on outsiders. A working lands town in the Northeast Kingdom or the Upper Valley cannot, or can, but only by leaning harder on its residents. As more communities adopt LOTs and as the state continues to back away from municipal support, that gap will only widen.
That is the policy question waiting on the other side of this amendment. Helping LOT towns keep more of their own revenue is a real and welcome step. It is not a substitute for an honest conversation about how Vermont funds municipal services in the towns that have few things to put a tax on. The squeeze on the local property tax is not going away. The education side is going to keep growing for the foreseeable future. And until the state finds a way to share revenue with the small towns that the LOT cannot reach, the gap between what residents need from their local government and what their selectboards can responsibly ask for will keep widening.
The White Amendment is a sign of the times. It is also a reminder of how much work remains.
Authors write on behalf of Atlas Government Affairs and Garnet Government Relations