Continuing his post-session showdown with the legislature, Gov. Phil Scott on Friday vetoed a bill that aims to improve and expand the state’s rental housing stock.
The bill, S.79, would require landlords of both short- and long-term rentals to register with the state and pay a $35-per-unit annual fee to fund a new team of housing safety inspectors.
The measure didn’t get over the finish line during the regular session, but lawmakers took it up during a veto session last week. It squeaked by in the 30-member Senate, receiving the exact number of votes — 20 — needed to override the governor's veto. Three moderate Democrats joined all seven Republicans in opposition.
In his veto message to lawmakers, Scott argued that the bill would actually reduce the number of rental properties in the state at a time when there is a need for significantly more.
“Most agree we suffer from a critical housing shortage for middle income, low income and homeless Vermonters, but the solution is not more regulation,” Scott wrote.
Instead, he argued that making it cheaper and easier for developers to build new homes in the state by keeping fees down and eliminating duplicative permit processes would help grow the supply of rental housing.
Lawmakers had said that an epidemic of substandard housing in the state has left local health officials ill-equipped to police the problem, necessitating state intervention. The bill also includes $5 million in grants to help landlords fix up blighted properties and help with downpayment assistance for some first-time homebuyers.
But Scott said the registry and fee structure “will discourage everyday Vermonters from offering their homes, rooms or summer cabins for rent, not as a primary business but as a means to supplement their income so they can pay their mortgage as well as their property taxes.”
Scott said he would instead support a registry for professional landlords who own more than two units rented out at least 120 days a year.
In a statement Friday afternoon, House Speaker Jill Krowinski (D-Burlington) said that amid a "severe housing crisis" Scott's veto "sets up backward."
"This bill was crafted to create equitable solutions to our housing crisis, in supporting both renters and landlords, and it passed with broad support from community and business organizations across Vermont," Krowinski wrote. "I have said throughout my time as Speaker that we need to create a recovery plan that works for all Vermonters, and by vetoing this bill, the Governor has taken away resources from our goal of recovery."
Under S.79, responsibility for investigating and enforcing substandard housing conditions would shift from town health officers to state fire inspectors. The bill would add five new fire inspectors to the Division of Fire Safety.
But Scott argued the bill removes the discretion of those inspectors to decide when a violation is enough of a safety risk to merit shutting down a unit.
He suggested the legislature reconsider an amendment to reform the existing system of local health officers, with the state only stepping in if local officers can’t or won’t intervene.
Scott also urged the lawmakers to continue funding other rental housing investment programs his administration supports. He also encouraged Act 250 reforms to help reduce regulatory barriers to housing development, a goal that has evaded his administration and lawmakers alike for years.
The veto comes about a week after the legislature passed the bill. On that same day, lawmakers successfully overrode two of Scott's vetoes. Those measures will allow noncitizen residents of Winooski and Montpelier to vote in local elections.
It's unclear if lawmakers would be able or willing to try to override Scott's latest veto. The legislature is next scheduled to meet in October.
Senate President Pro Tempore Becca Balint (D-Windham) said the veto ignored low-income Vermonters who are in need of safe, healthy housing.
"I’m extremely disappointed with the Governor’s actions today, at a time when we should be doing everything possible to guarantee access to decent housing for all Vermonters. The governor’s veto just doesn’t make sense,” she wrote in a statement.