MONTPELIER — Vermont Gov. Phil Scott wants to use the state’s annual midyear budget tuneup to set aside $75 million for property tax relief. But legislative leaders said they would rather hold on to that money, at least for the time being.
“It’s just not appropriate to be doing it at this point in time,” said Rep. Robin Scheu, D-Middlebury, who chairs the budget-writing House Appropriations Committee.
At issue is how lawmakers will contend with the nearly 12% average increase in property taxes projected this year across the state. To blunt that expected hike, Scott wants to include about $75 million in this year’s legislative effort to true-up spending halfway through the current fiscal year, which is called the Budget Adjustment Act.
The money would come from additional revenue Vermont has brought in that lawmakers didn’t know they’d have access to when they were building a budget for the current year, which governs spending from July 2025 to June 2026. Lawmakers enacted the current state budget in May 2025.
For leaders of the House and Senate appropriations committees, though, it’s too early in the year’s legislative session — which started last week — to fence off that surplus. The “budget adjustment” is often one of the first bills lawmakers take up each year, though its passage is not a guarantee.
Instead, the committee chairs want the property tax buydown proposal to be part of negotiations over the new budget for the upcoming fiscal year. They said waiting would allow them to weigh the plan in a fuller context of state revenue needs and pressures; to be sure, it could also be a useful bargaining tool in negotiations with Scott’s administration.
“We’re going to make a decision as part of the full budget,” Scheu said in an interview Tuesday.
Sen. Andrew Perchlik, D/P-Washington, said he needs to see what progress, if any, the Legislature makes toward advancing key provisions of last year’s sweeping education reform law, Act 73, before deciding whether to use the $75 million to reduce the property tax burden. The Senate Appropriations chair said he’s not sure at this point whether that is the right amount of money to spend on that purpose, either.
About half of the projected 12% tax hike would come from an expected jump in school spending, though districts are still in the process of formulating their budgets for the 2026-27 school year. The other half of the looming spike is the result of a fiscal hole left by lawmakers’ decision to use about $100 million to buy down property taxes in 2025.
Perchlik said the $75 million could also be used to respond to federal funding changes. The extent to which lawmakers can balance affordability concerns in the state with cuts from Washington, D.C., is likely to drive policy debate in the Statehouse this year.
“We’re not saying we’re against that,” he said of the buydown plan. However, “we want to see the whole education plan. We also want to see what all the other needs are.”
For their proposed version of the budget adjustment legislation, House and Senate leaders are also weighing whether to spend additional money to support public housing authorities that administer federal Section 8 housing vouchers. Many of those providers are entering 2026 “in pretty precarious fiscal condition,” James Duffy, an analyst with the Legislature’s Joint Fiscal Office, told the House Appropriations panel on Tuesday.
That’s in part because the organizations are staring down uncertain federal support from the U.S. Department of Housing and Urban Development, Duffy said, in addition to other challenges. Vermont’s House General and Housing Committee is slated to take testimony on the need for some additional funding Thursday.
Prison spending racks up
Scott’s budget adjustment proposal includes a number of other changes to state spending on human services, some of which are also driven by federal cuts.
That includes directing about $1 million to Planned Parenthood of Northern New England. Tracy O’Connell, chief financial officer for the Vermont Agency of Human Services, said that money would make sure Planned Parenthood could continue serving some 16,000 patients in the state after the tax and domestic policy bill Trump signed last July ordered a one-year moratorium on Medicaid reimbursements for the organization.
Scott’s proposal also includes $25,000 for the Vermont Human Rights Commission to fill an expected lapse in funding from the Housing and Urban Development Department. Big Hartman, the commission’s executive director and general counsel, said the federal money has long supported a joint federal and state program that investigates housing discrimination complaints.
Vermont’s rising prison population is also driving up costs. The Scott administration has recommended a roughly $4.5 million increase in funding for Wellpath, the private-equity-owned contractor that provides health care in state correctional facilities. The increase is tied to an uptick in the state’s average daily prison population.
Meanwhile, the plan includes about $390,000 to cover the costs of sending about 30 people incarcerated in Vermont to the private prison the state uses in Mississippi, Jon Murad, the corrections commissioner, told Senate Appropriations on Tuesday.
There is also $225,000 to cover the costs of corrections staff being put up at hotels when there is such little time between their shifts that “it makes little sense” for them to travel home in between them, said Adam Greshin, Scott’s commissioner of finance and management, “even if they’ve just got a short drive.”
Scott’s budget adjustment proposal also includes $385,000 to outfit state office space in Waterbury, including in the new space the Scott administration leased ahead of the start of its return-to-office order in December. That new space, at Pilgrim Park, will be used by the Department of Vermont Health Access, according to Greshin.
The House and Senate appropriations committees are slated to continue taking testimony on those and other budget adjustment proposals this week.
