Sign up to receive the Lt. Governor's Newsletter directly to your inbox!
Friend,
Vermont is not for sale.
It’s no secret that we’re facing a massive affordable housing shortage in Vermont. Over the past few decades, we have not built enough new units to keep up with our growing demand. This scarcity, along with the significant increase in second home ownership and short-term rentals has driven up the cost of available housing, making it out of reach for many low- and middle-income working Vermonters.
There is a lot of debate about how we can best address this affordable housing shortage. The challenge is whether we can discern the political rhetoric from the facts.
While the Governor and some legislators are using the housing shortage as a trojan horse for profiteering developers, the House passed comprehensive, broadly supported, thoughtful legislation that would both reduce permitting hurdles and build a lot more affordable housing while maintaining the Vermont we love. While it may be a piece of the puzzle, regulatory reform alone will not solve our affordable housing crisis.
Last month, the House passed H. 687, a balanced land use and development reform bill that has the support of both environmentalists and reasonable developers. This will eliminate duplicative permit review in town and village centers across the state to allow denser development where local land use programs and water and sewer capacity exists. By encouraging denser development, we can build more housing while protecting the majority of Vermont’s landscape and ecosystems, preserving the unique character of Vermont. To that end, the bill also includes increased protection for critical natural resources at higher risk due to factors like climate change.
Despite the widespread support from this unlikely coalition, Governor Scott has voiced his opposition to this plan in favor of irresponsible regulatory reforms that would be a dream for profiteers. Many of the provisions that he supports can be found in S.311, another Act 250 reform bill that does not have the same breadth of support. While S.311 has a few provisions that could be part of a reasonable compromise, the majority of this bill would allow for widespread development that would completely change the landscape of Vermont.
The idea that simply reducing or eliminating Act 250 review will increase our housing supply and reduce or stabilize housing costs unrealistic. The belief is that if we make it easier for developers to get permits to build, they will flock to our state and create the affordable housing that we desperately need. While it feels good to believe that this could work, it is not the full reality of this conversation. Why? Because the main factors driving up the cost of building housing are expensive materials and the shortage of labor, not permitting. The profit motive to build high end housing is too great to expect developers to leave money on the table. It will take a two-pronged approach, some regulatory relief AND continued incentives and support, to reduce the price.
The combined package of bills from the House will do both: build affordable housing and protect our landscape from profiteering developers. H.687 DOES reduce regulatory burdens in village, town and city centers and will help us build smartly instead of succumbing to sprawling overdevelopment. In addition to H.687, the House has also passed a bill that would raise revenue for a 10-year investment in affordable housing by lowering construction costs through financial support. This revenue would largely come from implementing a new top tax bracket for the top 1% of income earners in Vermont. Before folks react “NO MORE TAXES,” let me explain in more detail.
The current marginal tax rate for our top income bracket ($229,550 and above) is 8.75%. This means that whether you make $250,000 or $1 million, you are taxed at the same rate for income earned above that threshold. H.829 would implement a marginal tax rate at 11.75%, for income earned in excess of $500,000 for married individuals filing joint returns or $410,650 for unmarried individuals. This would go towards investing $900,000,000 over 10 years towards creating affordable housing in Vermont.
To put this into perspective, a married couple with a $1 million annual income would see their taxes increase by about $15,000. Their net income after all Vermont income taxes would still be $905,420. While the raw numbers may sound high, I do not think that this tax would put high-earning families into a vulnerable situation. It WOULD do a tremendous amount to help build more affordable housing in Vermont.
Now is the time to make your voice heard. Do you think we should irreversibly alter the landscape of Vermont in order for investors and real estate developers to make massive profits? Or do you think we should take a balanced approach and increase our development in our town and village centers, create more walkable communities, and invest more resources in affordable housing for everyday Vermonters? Contact your State Senators and Representatives to let them know how you feel.
This decision will be made over the next couple of weeks and will create the vision of Vermont for the next 50 years. Now is the time to speak up.
- Lt. Governor David Zuckerman