Vermont lawmakers have finished their work for the year, culminating in a major education reform bill.
Here are some highlights of the bills approved by the Legislature this year and signed by Gov. Phil Scott.
State budget
The $9 billion state budget for fiscal year 2026, which started on July 1, includes large line items for housing and community-based health organizations, and some smaller appropriations for things like community-based radio and Vermont’s search-and-rescue crews.
But the budget is most notable for the money it doesn’t spend — lawmakers are fencing off about $100 million in anticipated revenue surpluses in the event elected officials want to backfill lost federal funding.
Lawmakers have another $300 million in various reserve accounts standing by if proposed cuts to programs such as Medicaid and the Supplemental Nutrition Assistance Program make it through Congress.
Landmark education reform
Vermont’s sweeping education reform legislation, H.454, primarily aims to do two things. It transitions Vermont to a foundation formula, through which the state — not local voters — controls the bulk of school spending using a per-pupil grant. And it paves the way for wide-scale consolidation.
The legislation’s champions say it will stabilize property taxes, redirect spending where it is most needed, and create a more coherent governance system. But its critics are deeply anxious about the implications for local control and rural schools. The bill seeks to establish school districts with at least 4,000 students, and establishes class-size minimums that could close schools.
More from Vermont Public: How Vermont's big education transformation will work
Property taxes
Lawmakers and Gov. Scott approved a strategy to use $118 million in one-time surplus money to keep education property taxes nearly flat. Homestead tax rates — which is what residents pay on their primary home — vary from town to town, depending on local spending. But given the legislative action, the average tax bill will only rise about 1.1% in the fiscal year that started July 1.
More from Vermont Public: At a cost of nearly $120M, lawmakers hold property tax increases to 1%
Medical debt relief
Vermonters owe more than $150 million in unpaid medical debt, and legislation signed by the governor in May will wipe out most of it.
Old medical bills that have reached “terminal bad debt status” can be purchased for pennies on the dollar from collectors and health care providers. Lawmakers have allocated $1 million in state funding to buy, and then retire, up to $100 million in debt.
The debt-forgiveness plan is modeled after similar initiatives in states including Arizona, New Jersey, Connecticut and Rhode Island, which has retired $7 million in medical debt since launching its program in October.
‘Safe leave’
This law will allow employees to take up to 12 weeks of unpaid “safe leave” if the employee or a family member is the victim of domestic violence, sexual assault or stalking. It also broadens the definition of a caregiver in the state’s family leave act to include people in nontraditional family structures.
The legislation, which only applies to businesses with 10 or more employees, also allows employees to take up two weeks of unpaid bereavement leave. And it allows for unpaid leave related to a family member entering active military service. The law took effect July 1.
Phone-free schools
This law will ban student use of personal electronic devices in Vermont schools, from arrival to dismissal, starting in the 2026-27 school year.
It’s part of a nationwide movement: The Associated Press reported in June that a majority of U.S. states now have some sort of law on the books restricting the use of personal devices in schools.
Infrastructure to support new housing
The headlining policy of this year’s housing package, S.127, is a new financing tool for infrastructure that supports residential development. The Community and Housing Infrastructure Program will let municipalities and developers leverage the increased tax revenue from new construction to pay back loans for key infrastructure upgrades like water lines, roads and sidewalks. The bill permits $2 billion in infrastructure spending over the course of the program’s initial decade, a level of investment that housing boosters and municipal advocates have called historic.
The package also includes new fair housing protections for immigrants who lack legal status, measures aimed at streamlining development on contaminated brownfield sites, and a study that would look at creating a statewide land bank for buildings that have fallen into disrepair.
Gov. Scott signed the bill into law on June 12.
Separately, the governor vetoed a bill approved by the Legislature that would have transformed the motel shelter program, shifting the state's homelessness response system from one centered on state government to one administered by private nonprofit organizations.
More from Vermont Public: Gov. Phil Scott vetoes motel program overhaul
Hospital budgets
Lawmakers approved a wide-ranging piece of legislation that sets aside over $5 million for a host of health care reform efforts. This law:
- Standardizes prices charged at hospitals by basing them on Medicare reimbursement rates, to go into effect by 2027.
- Standardizes the hospital budget review process, including an opportunity for public comment and a consideration of the salaries of hospital leadership.
- Tasks the Agency of Human Services with overseeing a reduction in hospital spending by 2.5% for next year.
- Sets a long-term plan for hospitals to receive a fixed amount of revenue for serving their patients, as opposed to the current fee-for-service model, by 2030.
- Requires hospitals to give at least 45 days notice to state agencies and lawmakers before deciding to reduce or close certain patient services. State regulators could then adjust a hospital’s budget if needed to preserve a service.
Cap on hospital drug prices
A new law will cap how much hospitals in Vermont can charge commercial insurers for medications administered through injections or infusions, often used to treat certain cancers and autoimmune conditions. Right now, hospitals in Vermont have the highest markups in the country by far. The law sets a cap of 120% of the “average sales price,” calculated by the Centers for Medicare and Medicaid Services. This would mean hospital-administered drugs in Vermont would have the lowest prices in the country.
The insurance company BlueCross BlueShield of Vermont said the move would save up to $46 million a year and reduce proposed rate increases by up to 4 percentage points next year. Meanwhile, hospital leaders have said the price cap on these drugs is often lower than their purchase price, and would threaten services like infusion centers.
A contingency plan for BlueCross BlueShield
Legislation signed by the governor grants emergency powers to the state’s health care regulator in the event that the insurance company BlueCross BlueShield of Vermont is on the brink of insolvency — if they don’t have enough cash to pay patient claims. It allows the Green Mountain Care Board to temporarily lower reimbursement rates paid to the state’s most financially secure hospitals to keep the insurance company afloat.
“We hope that we never have to use this,” said Diane Lanpher, the director of legislative affairs for the Green Mountain Care Board.
Freestanding birthing centers
Vermont is the only state in the Northeast that doesn’t have a freestanding birthing center — a facility not affiliated with a hospital that provides care for low-risk patients and does not offer cesarean deliveries or epidural pain relief. S.18 aims to make opening a freestanding birthing center easier by establishing rules for licensing birth centers in the state, eliminating certain regulatory requirements called “certificates of need,” and requiring that commercial health insurance plans cover services at birth centers.
Reducing paperwork for health care projects under $10M
Hospitals and other health care facilities in the state must go through an application process with the Green Mountain Care Board for any new project expected to cost over a certain amount of money — like construction or renovation. This process can come with hefty application fees of up to $20,000. State leaders this year approved a law that raises the financial threshold of new projects that require an application to $10 million, and $5 million for health care equipment costs.
Reproductive and gender-affirming care
The intent of this legislation, which took effect when the governor signed it on May 13, is to fill gaps in Vermont’s existing shield law protections. Those provide legal cover for patients and providers of reproductive and gender-affirming care.
The law:
- Allows providers to use online questionnaires to prescribe abortion medication, making it possible to prescribe across state lines.
- Broadens which health care service advertising is regulated by consumer protection law. That’s after two Vermont crisis pregnancy centers and another anti-abortion organization sued the state in 2023.
- Adds privacy options for providers, including the ability to request the removal of one’s name or initials from “non-controlled” medicine prescribed for reproductive or gender-affirming care.
Immigration enforcement by local police
In 2017, just a few months into Donald Trump’s first term as president, Gov. Scott signed legislation that prohibited local law enforcement agencies from entering into contracts with federal immigration authorities without the express approval of the governor.
A few months into Trump’s second term, immigrant advocates said they found a loophole in that law — local agencies could, during a declared state or national emergency, enter into those types of agreements unencumbered by state law.
Legislation signed by the governor in May eliminates that loophole, and prevents local police from helping the feds with civil immigration activities under any circumstance, unless the governor signs off first.
Considering an Office of New Americans
This law calls for a study committee to look at creating an Office of New Americans in Vermont.
The idea is to better coordinate services for the roughly 30,000 immigrants in Vermont, and to expand the scope of the existing State Refugee Office to serve all foreign-born state residents.
Testimony on this legislation identified missed opportunities for incorporating this working-age demographic into Vermont’s economy.
The study committee will have to submit its report by Sept. 1, 2026. If Vermont does create an Office of New Americans, it will join nearly half of the states in the country that have a similar office.
Not a switchblade
Vermont contractors will no longer risk criminal sanctions for carrying a common tool of the trades.
Electricians especially rely on a type of utility knife that allows workers with only one free hand to unsheathe a blade with the flick of a wrist.
The problem? The knife had, until the governor signed a miscellaneous judiciary bill in June, fallen under a nearly century-old statute that bans switchblades.
Hate crime charges
Vermont’s attorney general told lawmakers this year that current statute has in some cases prevented prosecutors from pursuing hate crime charges in instances that warrant the enhanced penalties.
That’s because the law required members of a protected class to be the direct victim of a crime, which means the defacement or public property with racist graffiti, for example, wouldn’t qualify.
A bill signed by the governor in April now allows courts to consider the motive of the alleged perpetrator when determining whether to allow hate crime enhancements.
Supporting food start-ups
Small scale, home-based food producers will have more flexibility to grow their businesses before applying for state permits under a new law that took effect on July 1. Lawmakers this year increased the annual income a food producer can make from $10,000 a year to $30,000, before requiring a state food safety permit.
The law will affect “cottage food” producers, who make products such as granola, baked goods, jams and jellies, or flavored vinegar, and sell them at places like farmers markets or local stores.
Lawmakers said they wanted to encourage small start-up food producers and enhance Vermont’s food resiliency by giving consumers more access to local food.
More from Vermont Public: New Vermont laws for July 1 affect library books, bake sales and job ads
