MONTPELIER, Vt. (AP) — Republican Gov. Phil Scott has vetoed a paid family and medical leave bill, saying it it would have worsened economic inequity in the state.

Scott said Friday he will move forward with a voluntary program that doesn’t rely on a mandatory $29 million payroll tax.

“For years, Vermonters have made it clear they don’t want, nor can they afford, new broad-based taxes,” he said in a statement. “We cannot continue to make the state less affordable for working Vermonters and more difficult for employers to employ them – even for well-intentioned programs like this one.”

Democratic legislative leaders expressed disappointment about the veto. House Speaker Mitzi Johnson said the bill represented significant movement toward Scott’s position, but the governor was unwilling to compromise. Senate President Tim Ashe said Scott recognized the importance of paid family leave in granting it to state workers, but “now it’s time to extend that wisdom to every Vermont employee.”

Scott and New Hampshire Gov. Chris Sununu had announced plans for a two-state, voluntary program last year but it never materialized. New Hampshire lawmakers are considering several new proposals this year.

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