The Vermont House of Representatives passed H.454 (87-55) a sweeping education reform bill aimed at addressing education finance and delivery. While the bill passed, it contains many controversial provisions that will require further debate in the Senate. Notably, significant property tax classification changes are likely to affect the business community. The move could expose businesses to higher rates with recent actions casting doubt on promises to protect businesses. As passed by the House, the proposal expands property classifications from two to four:

• Homestead
• Nonhomestead, Apartment
• Nonhomestead, Nonresidential
• Nonhomestead, Residential

Although other sections of the bill were updated through a bipartisan amendment, many members still found them inadequate, and proposals to support Vermont’s business community were entirely omitted from the compromise. At a time when employers face workforce shortages, inflation, and national regulatory changes, the lack of meaningful state-level support is increasingly unsustainable.

The Vermont Chamber remains concerned and opposes the expansion of property tax classifications; more specifically, the creation of a category singling out businesses creating an opening for inequitable tax treatment, increasing the risk of higher tax rates in future years.

While some legislators insist that there is no intention to raise taxes on businesses, recent actions have undermined that promise. For instance, last year, the House passed $125 million in new taxes on businesses and working Vermonters, as well as a larger increase in the Nonhomestead property tax rate in comparison to the Homestead rate.

The Vermont Chamber advocated for the combination of the Nonhomestead, Apartment and Nonhomestead, Nonresidential categories into one unified Nonhomestead category. This consolidation would recognize that both property types share similar market-driven and investment characteristics, setting them apart from Nonhomestead, Residential properties. This consolidation would simplify the system, promote equity, and better protect Vermont’s overburdened business community.

Following a floor debate, a roll call vote was taken so that constituents could see their legislators’ positions on this critical issue. As the bill advances to the Senate, there is hope that a more balanced approach will be adopted to address education governance and finance reform, tackle cost containment, and prevent businesses from being singled out to bear an increasing share of the state’s tax burden.