| | This Issue Update newsletter is part of a series that provides more information on each priority issue on the Alliance's 2026 Legislative Agenda. The Legislative Agenda is crafted annually in partnership with early childhood organizations that are advancing legislative policy solutions related to health, safety, food security, economic security, and early care and education. The priority issues were selected by the Alliance's Steering Committee. | | | | The Alliance’s series of virtual Issue Spotlights begins January 26, at 3:00 pm, and will focus on potential future Federal budget cuts and the “Fair Share for Vermont” proposal to raise additional state revenue. More information can be found below. | | | | | | Federal Funding Cuts: Supporting Responses to Federal Funding Reductions Federal funds make up about a third of the state’s overall budget, and a critical percentage of funding for many programs serving Vermont’s families with young children every day, including Reach Up, 3SquaresVT, emergency shelter and housing supports, Medicaid, and child care. The Federal FY26 Budget that is eventually passed by Congress, whether comprehensive or piecemeal, is likely to include substantial cuts to this funding. The Alliance will support strategic, timely, and coordinated advocacy responses to federal funding reductions that ensure our community’s voices are heard, and that core needs are not unnecessarily pitted against one another. We will also support efforts to find increased state revenues to fill in gaps as possible. Legislative Update Congress continues to struggle to develop a federal budget for the current fiscal year, which began on October 1, 2025. The current temporary spending authority ends on January 30, and negotiations and political jockeying are ongoing. There are indications that there may be significant reductions to the financial support we receive from the federal government for many programs, including those impacting transportation, emergency response, health care, child care, housing, and others. There may also be another government shut-down, if no agreements are reached. In the Issue Spotlight session on Monday Matt Levin, Alliance Executive Director, will provide the latest updates on the state of negotiations in Washington, DC and the discussions in our State House about possible responses to funding reductions or interruptions. | | | |  | Data and Talking Points -
Federal funds make up about a third of the state’s overall budget – about $3.1 billion for FY26, compared to $2.5 billion in General Fund in the total state budget of $9.1 billion. -
Federal funding makes up a critical percentage of funding for many programs serving Vermont’s families with young children every day, including Reach Up, 3Squares, emergency shelter and housing supports, Medicaid, and child care. -
Support systems are already feeling the strain of increased need, even before any federal cuts are made. Hundreds of young children in families experiencing homelessness have been exited from the state’s emergency shelter program this summer, while food shelves in the state are seeing a marked increase in demand. | | | | Lead Organization Vermont Early Childhood Advocacy Alliance The Vermont Early Childhood Advocacy Alliance is a statewide coalition of early childhood professionals and providers, parents, organizations, and businesses working together to improve public policies that impact children from birth to age eight and families in the areas of health, safety, food security, economic security, and early care and education. | | | | | | Fair Share for Vermont: Raising State Revenue to Build a Vermont that Works for Everyone The State of Vermont does not raise enough revenue to meet Vermonters’ needs. This lack of sufficient state revenue has resulted in chronic underfunding of state programs and services, including programs that impact young children – investments in early childhood health and welfare, economic security, food security, and more. This underfunding will be exacerbated by federal funding cuts, putting added pressure on the state budget and further reducing the State’s ability to ensure that all people have the basic resources and support that they need to thrive. At the same time, wealth and income inequality have grown, resulting in a population of wealthy Vermonters who are able to pay significantly more in taxes than they currently are – and who are set to receive significant federal tax cuts due to recent Congressional action. The state must raise revenue from those who can afford to pay. The Alliance supports the Fair Share for Vermont Campaign in advocating for a tax increase on all people in Vermont earning more than $500,000 per year. This tax increase would claw back a portion of the $57,000 average annual federal tax cut that the wealthiest Vermonters are set to receive under the One Big Beautiful Bill Act, and will generate over $100 million annually for the state to improve public goods and services and increase resilience to federal funding cuts. Legislative Update The Fair Share for Vermont Campaign has put forward several revenue plans aimed at recapturing federal tax cuts to the wealthiest Vermonters and closing federal loopholes. The Campaign has been in discussion with legislators about these revenue plans, as well as additional revenue proposals brought forward by legislators to increase taxes on Vermont's wealthiest. This Legislative Session, the House Ways and Means and Senate Finance committees have heard testimony from tax policy efforts on the effects of the federal tax and budget bill, H.R. 1, including the scale of federal tax cuts for the wealthiest Vermonters. Following that testimony, Rep. Teddy Waszazak introduced three bills aimed at increasing taxes on high earners: H. 619–which would increase taxes on income over $1 million, H. 620–which would create a study on taxing the wealth of high net worth individuals, and H. 621 (cosponsored by Reps. Tiff Bluemle and Dave Yacovone)–which would increase taxes on personal income over $500,000. The Campaign expects additional bills with progressive revenue components to be introduced in coming days, and for progressive revenue to be a component of legislative conversations on the state budget and the need for additional state funding as federal funding becomes less reliable. | | | |  | Data and Talking Points - Due to recent Congressional action, the top 1% of Vermont taxpayers are set to receive an average annual federal tax cut of $57,000 per filer, beginning in 2026
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The Fair Share for Vermont Campaign's revenue proposals would raise over $400 million in annual state revenue through recovering federal tax cuts for the top 5% of Vermont income-earners and closing federal tax loopholes that benefit the wealthy. -
The state must raise sufficient revenue to meet the needs of all Vermonters, providing security and opportunity for Vermont residents at every stage of life. -
An increase in state revenue will provide the state with better resources to meet the needs of Vermont’s young children and families. | | | | Lead Organization Fund Vermont's Future Campaign Fair Share for Vermont is a campaign to increase taxes on the wealthiest Vermont residents to raise state revenue. The campaign is backed by a coalition of organizations and individuals from across the state, working together to build a Vermont that works for everyone who lives here. | | | | | |  | Alliance ‘26 Legislative Agenda Issue Spotlight – Federal Funding and Fair Share for VT – 1/26 In the coming weeks, the Alliance is hosting virtual Issue Spotlights that will focus on one or two issues from the Alliance’s 2026 Legislative Agenda. In discussions led by representatives from the issue’s Lead Organizations, participants will be able to ask direct questions and hear a brief legislative update. This year’s first session will be held Monday, January 26, at 3:00 pm, and will focus on potential future Federal budget cuts and the “Fair Share for Vermont” proposal to raise additional state revenue. Hosted by the Alliance and the Fund Vermont’s Future Campaign, this session is a great opportunity to learn more about these important issues, where they stand in the Legislature, and how to get involved. | | | | | |  | | | | | The Vermont Early Childhood Advocacy Alliance is a statewide coalition formed in 2000 of early childhood professionals, parents, organizations, businesses, and strategic partners committed to improving public policies that impact young children between birth and age eight in the areas of health, safety, food security, economic security, and early care and education. The Alliance crafts an annual Legislative Agenda in partnership with early childhood organizations, provides year-round advocacy support, and facilitates meaningful interactions with policymakers at key times during the decision making process. | | | | 7 School Street | Montpelier , Vermont 05602 vecaa.org The Vermont Early Childhood Advocacy Alliance is a program of the Vermont Community Loan Fund. | | | | | | | | | |
