We've discussed how Vermont's housing crisis affects businesses, workers, and local communities. But there's another significant consequence few people are discussing:
👉 Housing shortages are driving up property taxes and straining the state budget.
Here's why:
- Vermont has one of the highest property tax burdens in the country—and rising home values are making it worse.
- The lack of workforce housing forces the State to spend more on emergency shelters, rental assistance, and subsidies.
- When workers can't afford to live here, Vermont collects less tax revenue from businesses that struggle to stay open.
This article will break down:
✅ How the housing crisis is inflating property taxes
✅ Why the state budget is taking a hit from poor housing policies
✅ How solving the housing shortage could stabilize taxes and strengthen Vermont's economy
📝 How Vermont's Housing Crisis Impacts Property Taxes & the State Budget
1. The Hidden Cost of Vermont's Housing Crisis—Your Tax Bill
Vermonters already pay some of the highest property taxes in the country. But instead of solving the housing shortage, we're making it worse—and it's costing everyone.
📌 The contradiction:
- Homeowners see their property taxes rise yearly—yet Vermont isn't building enough housing to spread the tax burden.
- The State spends millions on emergency housing—but doesn't fix the root issue: a lack of affordable homes.
- Businesses can't find workers because of housing shortages—leading to lower tax revenue from struggling local economies.
📌 The reality check:
Housing policy isn't just about affordability—it's about tax stability. The key to controlling rising property taxes and balancing the state budget in Vermont is simple: we need more homes.Here's why better housing policies could mean lower taxes for everyone. By addressing the housing crisis, we can create a more affordable and sustainable future for Vermont.
2. The Link Between Vermont's Housing Crisis & Rising Property Taxes
📍 1. Property Taxes Keep Rising Because Housing Supply Isn't Keeping Up
- Vermont's property tax system relies heavily on home values—and when housing supply is limited, values soar.
- This pushes property taxes higher because assessments rise faster than incomes.
📍 Example: How Lack of Housing Is Driving Up Taxes in Chittenden County
- Towns like Burlington and South Burlington have seen double-digit property tax increases over the past five years.
- Home values have climbed rapidly due to low inventory. Still, the tax burden isn't being spread without enough new housing.
💡 The Reality:
- If Vermont built more housing, the tax burden would be spread among more homeowners, keeping individual property taxes lower.
✅ Smart Fix:
- Encourage new housing development in growing areas to help stabilize property tax rates.
📍 2. Vermont's Housing Shortage Is Costing the State Millions in Emergency Housing & Rental Assistance
- The lack of affordable housing has led to record numbers of Vermonters needing emergency shelter.
- Vermont spent $90 million in 2023 on hotel vouchers and rental subsidies—one of the highest per-capita rates in the nation.
📍 Example: The State's Expensive Motel Housing Program
- Vermont has been putting homeless individuals in hotels and motels due to the lack of affordable rental housing.
- The program has cost the state tens of millions annually but doesn't provide a long-term solution.
💡 The Reality:
- If Vermont had more workforce and low-income housing, fewer people would need state-funded emergency housing.
✅ Smart Fix:
- Redirect funding from emergency shelter programs into building permanent affordable housing.
📍 3. Fewer Workers = Lower Tax Revenues for the State
- The State also loses tax revenue when Vermont loses workers due to housing shortages.
- Businesses struggle to find employees who earn less, meaning they pay less in taxes.
📍 Example: The Workforce Shortage's Impact on Vermont's Economy
- Restaurants, manufacturers, and healthcare providers can't fill jobs because workers can't find housing.
- Vermont collects less income and business tax revenue when the economy slows due to worker shortages.
💡 The Reality:
- More workforce housing = more workers = stronger local economies = more tax revenue.
✅ Smart Fix:
- Incentivize developers to build mid-priced workforce housing so employees can afford to live where they work.
3. The Path Forward: How Vermont Can Fix Housing & Stabilize Taxes
📌 If Vermont doesn't fix its housing crisis, taxes will keep rising—and the State will keep spending millions on temporary fixes.
Here's what Vermont should do instead:
✅ 1. Expand Housing Supply to Stabilize Property Taxes
- Allow more housing development in town centers to prevent housing scarcity from driving home values.
✅ 2. Shift State Spending from Emergency Housing to Long-Term Solutions
- Invest in permanent workforce housing rather than costly motel programs.
✅ 3. Encourage Smart Growth to Keep Businesses Thriving
- Build housing near job centers so workers can afford to live in Vermont—keeping businesses open and tax revenue stable.
💡 The Reality:
- If Vermont continues delaying housing solutions, tax burdens will increase. By acting now, we can create a more sustainable, affordable future.
4. 🚀 Take Action: What Vermonters Can Do to Push for Smarter Housing Policy
📢 1. Demand Housing Policy Be a Budget Priority
- Vermont's leaders should spend more on permanent housing solutions—not just short-term fixes.
📝 2. Push for Smart Growth Policies to Stabilize Property Taxes
- Housing development should be encouraged in high-demand areas to spread the tax burden.
📬 3. Support Zoning Reforms That Make Housing More Affordable
- Faster permits and flexible zoning laws will make building homes for Vermont workers easier.
📣 4. Share This Article & Start the Conversation
- If Vermont's leaders don't hear from residents, nothing will change.
5. 🖊 About the Author
Tony Walton is a Vermont-based real estate professional with deep roots in the community and a passion for keeping the State livable for future generations. Whether you're buying, selling, or want to talk about Vermont's housing future, reach out at tonywalton@nelandmark.com.
🚨 If Vermont wants to control rising property taxes and balance the budget, housing policy must change. More homes mean lower tax burdens, fewer emergency costs, and a stronger economy.
Next Week: The True Cost of Not Building More Homes in Vermont.
