Scott vetoes tax increase proposal



(The Center Square) – Republican Gov. Phil Scott has vetoed Vermont’s annual property tax bill in response to double-digit increases proposed by the Democratic majority Legislature and is calling for relief for taxpayers.

Lawmakers approved the so-called “yield” bill on Thursday that would result in an average statewide education property tax increase of nearly 14% next year. Scott sent it back to them, saying Vermonters can’t afford a double-digit tax increase. He called on Democratic legislative leaders to come up with a new proposal that reduces the burden on the state’s taxpayers.

“Especially while facing a historic 8% property tax increase last year, a 20% increase in DMV fees, a new payroll tax taking effect July 1, increased fuel costs to heat homes and businesses from the Clean Heat Standard, and increased electric costs if my veto of the Renewable Energy Standard is not sustained,” he wrote in a veto message to lawmakers.

“All on top of several years of inflation – the most regressive tax of all – driving up the cost of household essentials like food, clothing and services faster than paychecks are growing,” Scott added.

Democratic House Speaker Jill Krowinski called the governor’s veto “deeply disappointing” and said the failure to pass a tax plan will create a deficit in education funding and “exacerbate the state’s stability and affordability issues.”

“This legislation is a critical step toward providing much-needed tax relief to Vermonters while ensuring the long-term stability and sustainability of our education system,” she said in a statement. “The governor has been unable to provide any alternative plan that would be workable for the start of the fiscal year on July 1.”

Krowinski pointed out the legislation includes a provision creating a new state commission to consider structural taxing and spending reforms during the next legislative session.

“This commission will allow Vermonters to provide input on the state of our education system, make recommendations for a statewide vision, and prepare us to take legislative action to support our children, teachers, and Vermont taxpayers,” she said.

The Vermont Department of Taxes has estimated an 18.5% rise in property taxes next year, driven by a 12% increase in education costs. But lawmakers were able to lower the property tax increase to an average 13.8% by adding a tax for Vermont businesses that use software storage and a new 3% tax on short-term rentals.

Lawmakers are expected to revisit the yield bill when they return to the Statehouse on Monday for a veto session, where they will consider an override of Scott’s objections.

If lawmakers don’t reach a consensus plan with the governor before the July 1 beginning of the fiscal year – or override Scott’s veto – the state would roll over last year’s yield. Legislative budget writers have said that would result in an average property tax increase of 30% for businesses and non-primary residences and create a $93 million deficit in the state’s education fund.

Scott said the tax increase is the latest in a string of actions by the Legislature’s Democratic supermajority that have driven up the cost of living. He said taxpayers need relief now, urging Democrats to work with his administration on tax reforms.

“This can’t wait for another study before implementing cost containment strategies,” he wrote. “We must also reform our education funding formula to ensure sustainable spending growth and equitable opportunities, and prioritize funding educational opportunities that improve outcomes by reinvesting in the strategies that best serve kids over maintaining the status quo.”

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