Gov. Phil Scott vetoed a bill to inject $124 million into the state’s childcare system over concerns that it would be paid for mostly with new payroll taxes.

The move was no surprise; Scott had been warning for months that his more modest $56 million increase would have stabilized the state’s ailing system with no new taxes. Scott said he’s long advocated for a boost to childcare but that raising taxes risks further burdening residents and hampering economic growth.

The bill would have authorized one-time spending of $50 million next year and $50 million in 2025 and created a payroll tax that would generate about $82 million in 2025. After expenses, that would result in an additional $124 million in grants for childcare centers and subsidies for families of four making up to $172,000 per year, making Vermont the most generous in the nation for childcare.



The payroll tax would increase 0.44 percent under the bill, with employers paying 75 percent and workers 25 percent of the increase. Lawmakers said that amounted to less than $1 a week for someone earning an average wage.

Scott said he worried the new taxes were unnecessary and regressive. For a low-income person already receiving free childcare, “under their plan, you would have to pay a tax so that more affluent families get support with no added benefit to you. “

“I’m not vetoing childcare; I’m vetoing the payroll tax," Scott said. "Once the door is open, I guarantee, because it’s just a little bit out of everyone’s pocket, they'll be going back to the well time and time again.”

Lawmakers opted for the boost to the childcare system in H.217 after years of testimony that the state’s childcare capacity was low, its workers are woefully underpaid and many facilities are on the verge of closure.

Scott, however, seemed skeptical that the infusion would do anything to increase the number of spaces at childcare centers in the state.

“I’d like to see that math,” he said.

Lawmakers vowed to override the veto and appear to have plenty of votes to do so. Senate President Pro Tempore Phil Baruth (D/P-Chittenden-Central), vowed to make the bill the No. 1 priority during the upcoming veto session on June 20.

“H.217 represents an authentic, long-term solution to our childcare crisis by helping parents afford care and helping caregivers afford to stay in their profession,” he said in a statement.

House Speaker Jill Krowinski (D-Burlington) said the bill was important to help people juggle work and family and predicted that without it the state would see millions less in wages.

“Vermont cannot be a state that supports working families and a thriving economy without a child care system that is available to all,” she said in statement.