Vermont Child Care Funding Boost, Payroll Tax Become Law as Legislature Overrides Governor's Veto

A child care system that advocates say is on the brink of financial insolvency will get a $120 million boost next year after Democrats in the House and Senate overrode Gov. Phil Scott’s veto of their child care bill Tuesday.

Scott said he shared lawmakers’ concerns about lack of access to affordable child care in Vermont, and his budget proposal included $56 million in new funding annually for child care subsidies.

Democratic lawmakers, however, as well as some of their Republican colleagues, said the system requires a far bigger infusion in order to improve affordability for families and increase pay for child care workers. In overriding the governor’s veto, the Legislature has enacted a new payroll tax on workers and businesses that will increase public funding for child care by about $120 million annually.

Shelburne Rep. Jessica Brumsted, a Democrat, said Tuesday that the bill represents “an investment in Vermont’s economy” that will allow more parents to fully participate in a labor force that’s shrunk by nearly 20,000 people over the last three years.

The House passed the child care bill by a vote of 118-27 last month.

“That strong vote was a clear indication that we as a body recognized the need to do something, something significant about our broken child care system,” Brumsted said. “[The bill] addresses the necessity to provide financial stability for all our child care programs, both in our homes and centers ... and to adequately and fairly compensate Vermont’s talented early educators.”

The override vote in the House was 116-31, with at least 10 Republicans voting to support its enactment. The Senate overrode the veto on a party line vote of 23-7.

Scott argued in his veto letter that the payroll tax is a regressive revenue source that will force low-income workers to contribute to child care subsidies for families of four with household incomes as high as $172,000 a year.

“If you are a lower-income Vermonter already receiving free childcare, you will have to pay a tax, with no added benefit to you, so that families with higher incomes get support,” Scott said.

In a state with “one of the highest tax burdens in the nation,” Scott told lawmakers, “the last thing we should be doing is making it worse.”

“Supporters of raising taxes and fees will always point to the relatively small amount raised for each individual program or service, trying to suggest it is not that much money,” he said. “But that type of narrow here-and-there thinking adds up, year after year, and has made living in Vermont increasingly unaffordable.”

Arguments in favor of increased public funding from the child care advocacy organization Let’s Grow Kids, however, won the day in Montpelier.

Aly Richards, CEO of Let’s Grow Kids, said in statement Tuesday that the override “is a monumental step forward for our state in addressing the ongoing child care crisis.”

“The legislation will result in a more affordable Vermont, increases access to quality, affordable child care for families, improves compensation and support for our essential early childhood educators, and provides much needed relief for child care programs in every corner of the state,” she said.

Written by Peter Hirschfeld; originally published via Vermont Public on June 20,2023.