Legislative
Update
Rep.
Anne Donahue
June
6, 2025
As a student many decades ago, I was one
of those who put off studying for exams until the last minute and then crammed.
If I had received a time extension, I likely would have still waited until the
last minute to cram. The legislature reminded me of my early self this year. We
extended the session by two weeks in order have added time to resolve
differences between House and Senate on education reform. Nonetheless, lots of
other major bills were still crammed into the final few days.
As a result, during the interim of those
extra two weeks many committees had time on their hands; the education bill
conferees, meanwhile, did not end up with a final bill. As a result we have
suspended adjournment until June 16 in order to give those six conferees more
time. We should have done that two weeks sooner! It would have saved a lot of
money if members had completed the other work on time and left only the
unfinished education reforms for more work.
At this point, the interim “progress”
after six days is that the conferees finally negotiated a date – next Wednesday
– to meet again to hash out a compromise. In the meantime, they will try to
work on revisions to current proposals. We won’t really know where the final
draft ends up until their work is done.
***
What Else Was Left Hanging?
Besides education reform, a key tax bill
got temporarily stuck in the Senate. It includes the partial income tax
exemption for military retirement and survivor’s benefits, which I’ve fought to
achieve for many years, knowing how much it would help recruit workforce at
Norwich. (Virtually every other state offers this exemption.)
The bill isn’t dead. The Senate knew it
was going to get the added days in mid-June to finish its work and since the
bill was approved by House-Senate conference committee members, it shouldn’t
face any problem getting passed.
The bill also increases the age for the
$1,000 child tax credit from 5 to 6, increases the state portion of the earned
income tax credit, makes slight increases in the income percentages for
exemption of social security and civil service retirement income, and adds a
veteran’s tax credit.
***
What Got Finished?
The budget, which is usually the bill that
closes a session, was voted out early this year. The final increases were less
than the legislative proposals but more than the governor’s starting point. It
was an indicator of the increase in balance when a Democrat-controlled
legislature that no longer has a super-majority (the 2/3rds majority needed to
overturn a veto) can no longer allows for completely ignoring a Republican
governor.
With most other controversial bills, the
legislature held to its own priorities but gave in enough so that the governor
reluctantly supported the end result. Here’s the quick synopsis on some of the
major responses to current state crises:
***
Housing
The governor got a watered-down version on
one initiative, and no progress on the other. Construction costs have
skyrocketed, and developers are held back on projects when they cannot turn any
profit at all. Time and uncertainty add costs, but efforts to ease some of our
difficult permitting processes have failed.
One new tool was created to allow
investments in necessary infrastructure by towns. The money comes from property
tax revenues and is paid back by the increased tax revenue created by the new
properties. Near the end of the bill process, the House added some new hoops to
get access to those advance funds, making it harder for towns to work with
developers to achieve the desired outcome (more housing development.) It
remains to be seen whether it will still be of any use for the intended target,
which was smaller towns that can’t afford the investments in water, sidewalks
and the like.
***
Health Care
The scope of our health care crisis became
more visible as the year progressed. Smaller hospitals are losing money to the
extent of facing risk of closure, and our one primary insurance company is on
the brink of bankruptcy as claims come in at higher-and-higher costs. This is
no longer just about skyrocketing cost – it’s about basic access.
As with many of our crises, this is much
bigger than Vermont can solve on its own, and both housing and health care are
critical issues for many states. We are small enough that our non-profit
hospitals each have their own “catchment areas” that create a near monopoly. That
eliminates competition as a cost control, and likewise for insurance companies
who see there is no market to compete for here.
Twenty years ago, Vermont’s health system was
running at below average cost but was increasing in costs at a faster rate than
elsewhere. We are now one of the highest costs per person in the country, and
our largest medical center is the most expensive, anywhere.
When there are no market pressures (and those
pressures have much less impact in health care dynamics than in any other area,
regardless) the only alternative become increased regulation. This year’s new
bills pressed mostly in that direction, in particular in efforts to squeeze the
UVM Health Network to reduce expenses in order to keep all the other parts of
the system alive.
None of these bills will be game-changers.
The largest initiative includes creation of a new “Statewide Healthcare Deliver
Strategic Plan,” the first effort at a comprehensive tool to prioritize needs
since my bill in 2002. Certainly overdue!
***
Homelessness
We should be hearing any day whether the
governor vetoes the bill my committee developed in response to a dysfunctional
system that pays a lot of money to put some people up in hotels, but leaves
others out. The focus of the bill is a transformation into an actual unified
system, run by our community action agencies (Capstone in Central Vermont), to
coordinate services to move people into permanent housing and reduce the use of
motels.
The governor has expressed concerns as to
whether it may cost more money in the long run, although it does meet his
criteria for a program that actually provides services to help folks, rather
than just pays hotels to house them.
I supported this bill because I don’t see
a better alternative. I don’t think the alternative of leaving people who are
seeking help on the streets is acceptable. It will take a year to make these
changes in the system, and they need to start now.
It was ironic – and mystifying – to see
the legislature pass a budget that left in place the exact status quo as last
year for funding hotels in the interim. It uses a broad definition for the
eligible group of “most vulnerable” but leaves in place the same caps on the
number of rooms that can be funded, and the number of days a household can
stay. The result is not enough capacity for all who are eligible.
Those limits were what drew outrage from
legislators when people were being evicted both last fall and this spring. There
was a standoff with the governor, who would not agree to add more money to the
current year budget to change what had been passed into law. We have now put into
place a recurrence for the year ahead.
In the meantime, changes to the new reform
bill at the last moment removed additional funds for creating new shelter
programs to replace isolated hotel rooms. There are advocates who press for
private accommodations for those in need of support, saying that shelter
programs lack dignity. I think we are doing too much for too few, and it would
be better to put our resources into less costly shelter capacity that allows
fewer people to be left on the street. The new program our bill proposes is a
compromise but makes headway.
***
Stay Tuned
Although not meeting until June 16, we
haven’t officially adjourned. Anything, in theory, will be up for debate when
we regroup.
In education reform – as with
homelessness, and health care, and housing – there is both urgency and a need
for enough time to make change thoughtfully. Those operate in tension, but
anything that ends up being rejected because it does not respond to a crisis
quickly enough, or as ideally as we might like, only means another year of
delay.
If we do not move forward this year with
education reform to allow us to use money more efficiently and to seek more
equitable outcomes, consider this: Last year, the average property tax increase
was “only” 14% because the original increase (18% on average) was reduced by
transferring extra money from the general fund.
For the 2026 budget we have transferred
$77 million from the general fund to the education fund to defer what would
have been an additional 7% percent average increase in property taxes (it will
average 1% instead.) That creates a false sense of less urgency. Taking money
from the general fund means other priorities that lose out. Sooner or later,
the bill will come due.
***
Thank you for all of your engagement this
year. Please stay in touch with me (adonahue@leg.state.vt.us)
and Rep. Ken Goslant (kgoslant@leg.state.vt.us)
as we work to represent you.
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