Published June 16, 2026 at 10:03 PM EDT

This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.

Vermont’s homelessness response system is getting a restructure.

Gov. Phil Scott signed H.938 into law Tuesday evening, marking a rare moment of political agreement on Vermont’s approach to homelessness. The issue has divided the Republican governor and the Democratic-led Legislature for years as the number of Vermonters experiencing homelessness has skyrocketed and federal pandemic-era aid has run dry.

H.938 tries to better organize the fragmented system serving the roughly 4,000 people experiencing homelessness in Vermont. It sets up a “continuum” of shelter options for unhoused people to move through, from rental aid to prevent homelessness to highly structured shelters to low-barrier settings with looser rules around sobriety. The bill sets aside a total of nearly $83 million for shelter, services and implementation in the coming fiscal year, which begins July 1.

Private hotels and motels, which are currently the single largest provider of shelter in Vermont via the state voucher program, remain part of the continuum — yet their use will be more limited, with lower caps on the number of rooms the state can use throughout the year and how long individuals can stay in them.

The mass use of motel rooms as shelter has proven to be a political football since COVID-era federal cash dried up in 2023. Scott’s administration has pushed hard to pare back the motel program, arguing that it is ineffective and too costly to continue on the state’s dime.

Lawmakers have haltingly agreed to winnow down its scale over the last few years, setting new restrictions on eligibility that have resulted in unrelenting waves of evictions. The Legislature passed an overhaul of the homelessness response system in 2025, but Scott vetoed it, arguing the bill did not adequately reduce the scale or cost of the motel voucher program.

Shelter providers and advocates for unhoused people have argued repeatedly that cutting motel use before the state builds out an adequate amount of shelter and low-income housing will result in more people living outdoors. The state has witnessed an uptick in unsheltered homelessness in recent years.

Those concerns remain today, with shelter providers worried that H.938 lacks enough funds to meet the widespread need. Yet some advocates see the new law as a way out of perennial political battles over the motel voucher program.

“This legislation gets us out of the fight about hotels and motels and to the real work of ending homelessness,” wrote Brenda Siegel, executive director of End Homelessness Vermont, in a statement. “This is not a silver bullet. It is not going to end the crisis, but it is a runway.”

To her and other advocates, the legislation is a mixed bag. Siegel applauded new disability protections in shelter services enshrined in H.938. Meanwhile, shelter operators have expressed concerns that new prioritization rules for who can access their services might mean they need to turn people away, and that time limits imposed on shelter stays won’t be realistic for how long it typically takes to find housing for clients.