Gov. Phil Scott’s fiscal year 2026 budget comes out to about $9 billion in total.
Here are some of the spending priorities and policies Scott is pitching for the coming fiscal year:
1. Level property taxes, and the end of universal school meals?
The governor is seeking to hold property taxes level — avoiding an estimated 6% increase tied to school spending — by using a one-time infusion of $77 million from the general fund.
Scott would also offset some of the expected tax increase by ending the state’s new universal school meals program, Administration Secretary Sarah Clark told reporters Tuesday. The meals program is expected to cost about $19 million next year.
2. Tax reduction package
The governor is proposing tax changes that he says would alleviate financial pressure on Vermonters.
As part of his proposed $13.5 million package, Scott wants to expand the income tax exemption for Social Security benefits. His budget proposes that single tax filers making less than $55,000 should be fully exempt from tax on their benefits (up from $50,000) and that joint filers making less than $70,000 should be fully exempt (up from $65,000).
He also wants to eliminate the state income tax on military pensions, saying it would encourage veterans to start second careers in Vermont.
The governor is proposing to expand Vermont’s $1,000 child tax credit to include income-eligible families with children up to age 6. (Currently, only families with children 5 and under qualify.)
He also wants to boost the earned income tax credit, which helps lower-income households without children.
3. Public safety and “Raise the Age”
Scott proposed that the state should abandon its plan to treat 19-year-olds accused of most crimes as juvenile offenders, rather than as adults. That’s part of a law known as “Raise the Age.”
He proposed making it easier to revoke bail, and harder to reduce or suspend sentences.
Scott also proposed spending to confront the overlap in crime, addiction and mental health, including a move toward repurposing the Northeast Regional Correctional Facility in St. Johnsbury into a treatment-specific facility, and building a pilot recovery campus in the Northeast Kingdom for justice-involved individuals.
4. Climate policy
The governor wants to repeal the provision that puts Vermont at risk of legal action if it doesn’t meet emissions-reductions targets at rates that scientists say are needed to avoid the worst effects of climate change.
That provision is included in the law known as the Global Warming Solutions Act.
Scott also wants to revisit legislation that allows Vermont to sue large fossil fuel companies for economic harms caused by climate change. And he says he'll be asking lawmakers to take another look at a 2024 law that requires electric utilities to get 100% of their energy from renewable sources by 2035.
5. Housing improvement and affordability
Scott wants to make two housing programs permanent:
- The Vermont Housing Improvement Program, which helps cover the costs of rehabilitating or adding housing units.
- The Mobile Home Improvement and Repair Program, which helps the owners of manufactured homes pay for projects and repairs.
These pandemic-era programs were initially funded with one-time federal funds.
According to the budget summary, Scott also allocated $15 million each to two Vermont Housing Finance Agency programs: the Rental Revolving Loan Fund, which incentivizes the creation of rental housing aimed at middle-income households, and the Middle Income Homeownership Program, which provides resources for the construction and rehabilitation of modest homes.
Learn more:
Read the governor’s budget document and proposed budget bill language.
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