Updated at 2:57 p.m.

Gov. Phil Scott on Thursday vetoed the bill meant to set property tax rates for education, arguing that it would result in steep tax increases that many residents can’t afford — especially in light of their other rising costs.

“Vermonters cannot afford a double-digit property tax increase,” Scott wrote in his message vetoing H.887.



Lawmakers passed what is known as the “yield bill” toward the end of a late-night session on May 11. They scrambled to find ways to boost the state Education Fund with other revenues in order to reduce average property tax increases that at one point were predicted to exceed 18 percent.

After passing measures that included a sales tax on the use of online software anticipated to bring in $14.7 million and a 3 percent tax on short-term rentals that would raise $12 million, they were able to limit the average property tax increase for most homeowners to 13.8 percent.

But Scott said that is still unacceptable, especially when combined with a 20 percent increase in Department of Motor Vehicle fees, a new payroll tax to fund childcare and stubborn inflation, which he noted is “driving up the cost of household essentials like food, clothing and services faster than paychecks are growing.”

“We must provide property tax relief now. This can’t wait for another study before implementing cost containment strategies,” Scott declared.

Scott has said he has a plan to contain costs that he wants to discuss with legislative leaders and needed to veto the bill before those talks could take place. He vetoed the bill the same day he received it from the General Assembly to facilitate those talks, which are scheduled for next week, he said on Thursday afternoon.

“We wanted to make sure there was enough runway now to have those discussions,” he said.

Scott cautioned the public not to expect he’ll have any grand new proposals.

Rather, his ideas are in line with the suggestions his administration has made in recent months, perhaps “with a little bit of variation.”

He didn’t detail those ideas at his Thursday press conference but said they involve reducing tax rates, putting “constraints on future budgets” and fixing the “structural issues” within the state education financing system.

Lawmakers have largely rejected many of Scott’s suggestions, including one that Treasurer Mike Pieciak warned might hurt the state’s credit rating. That idea involved reducing property tax rates by loaning school districts money that they could pay the state back later.

Scott didn’t bring that up on Thursday but said he considered all options to be still on the table.

“I’m hoping they can work with us and we can give Vermonters relief,” he said.



House Speaker Jill Krowinski (D-Burlington) did not sound optimistic about any agreement.