Skip to main content

Finance

Tools & Tips for Building Capital & Operating Budgets

Ever wish you could brush up your budgeting skills and deepen your understanding of the process with the help of a trusted partner?  Or you could learn more about the critical role of capital planning in your municipality's future but don't know how to implement it or take what you might have to the next level without a little bit of insider knowledge or guidance?  Well, consider VLCT your new budget-best-friend. 

This page is dedicated to providing those of you involved with municipal money matters with tips and tools to help grow your knowledge and skills base for successful budget building.  

Webinar:  

Muni Mornings + Money Matters: Tools & Tips for Capital and Operating Budgets (August 28, 2025)

Recording:  Muni Mornings with Kathleen - 8.28.25

Slide deck: Muni Morning + Money Matters Slides

Tools & Tips:

Budgeting

Borrowing

Capital Budgeting

 

Having a tough time getting started?  

VLCT’s Municipal Support Team is here to help!  Government Finance Specialist Marguerite Ladd, mladd@vlct.org, and Municipal Operations Specialist Kathleen Ramsay, kramsay@vlct.org. 

 

* VLCT Tools are to be used for informational and general guidance purposes only. It is your responsibility to verify the results, adapt the tool(s) to your specific circumstances, and ensure that any data entered is accurate and appropriate for your intended use. By using VLCT Tools, you acknowledge and agree that any reliance you place on their functionality or outputs is strictly at your own risk.  Use at your own discretion.

Publication Date
08/21/2025

Understanding the Difference Between Login.gov and SAM.gov

Login.gov and SAM.gov are both official U.S. government websites, but they serve different purposes. It’s important to know how they work – especially if you’re a municipal official or volunteer helping with grants or federal programs.

What is Login.gov?

Login.gov is like a secure digital key that lets you sign in to many government websites with just one username and password.

A Login.gov account is unique to an individual (a personal account).

  • It’s used across agencies: You might use it for Social Security or for your work in local government (like accessing a federal grant site).
  • Security is a priority: You’ll need a personal email, a strong password, and an extra layer of security (like a text message code or fingerprint scan).
  • One account only: You can add more than one email (like both personal and work), but you should only have one Login.gov account. It should be set up using your personal email in case you change jobs.
  • Help is available: Visit login.gov/help if you need to reset your password or change your email.

Note: Never share your Login.gov credentials with anyone. It’s tied to your personal information.

What is SAM.gov?

SAM.gov (System for Award Management) is where organizations – like your municipality – register to do business with the federal government. This includes applying for federal grants.

A SAM.gov account is unique to an individual (a personal account). A SAM.gov registration is unique to the municipality (a business account).

  • Public searches: Anyone can look up basic information, such as wage determinations, without an account.
  • Full access requires a user account: To view or manage your municipality’s registration, you’ll need an account.
  • Roles matter: Municipal staff are given specific roles (like Administrator or Contract Manager) to access and update the municipality’s SAM.gov profile.
  • Annual renewal required: Your municipality must renew its registration every year.
  • Help is available: Call 866-606-8220 or visit www.fsd.gov for help.

Important: Only people with official roles should have access to the municipality’s SAM.gov profile. If someone leaves their position, their access should be removed.

How Login.gov and SAM.gov work Together
  • You need a Login.gov account to sign in to SAM.gov. It’s your secure login method.
  • Login.gov doesn’t store any information about your SAM.gov profile - it just lets you sign in.
  • Use the same email address for both accounts if you’re managing SAM.gov activities. This ensures a smooth connection between the two systems.
  • If you change your email in one system but not the other, you could lose access.
Best Practice for Municipal Officials

If you’ve just been assigned to help manage your municipality’s SAM.gov registration:

  • If you already have a Login.gov account with a different email, just add your work email to it. You can do this by signing in at Login.gov, going to "My Account," and adding the email (don’t remove your personal email).
  • If you already have a role in a SAM.gov account and are setting up a new Login.gov profile, use the same email you used for your SAM.gov account to create your Login.gov account.
Final Tips
  • Both accounts are free to set up and use.
  • Keep your Login.gov login info private.
  • Keep your municipality’s SAM.gov profile updated and renewed annually.
  • Use consistent email addresses between systems to avoid access issues.

 

This document was created by a human subject matter expert and edited using artificial intelligence.

Publication Date
07/27/2025

IRS Help Available for Claiming Energy Tax Credit

Member for

2 years 7 months
Submitted by bwaninger@vlct.org on
highway sign reading "solar tax credits"

The IRS is offering office hours (through Microsoft Teams) to help entities with the pre-filing registration process on the Pre-filing Registration Tool.

Pre-filing registration is a required step for applicable entities, like municipalities, to take advantage of elective payment of certain credits, such as renewable energy generation, EVs, and EV charging infrastructure. Representatives from the IRS will be available to answer your pre-filing registration questions. 

Registration for office hours is open. Registration is required and can be completed by clicking on the links below.

DateTimeRegister
August 20, 20251 to 2 PM Eastern TimeRegister
September 17, 20251 to 2 PM Eastern TimeRegister
October 15, 20251 to 2 PM Eastern TimeRegister
November 19, 20251 to 2 PM Eastern TimeRegister
December 17, 20251 to 2 PM Eastern TimeRegister
January 21, 20261 to 2 PM Eastern TimeRegister

IRS Resources:

Additional resources, including links to access sample tax credit forms, are available on VLCT's webpage, Claiming Tax Incentives for Your Clean Energy Project.

Join the growing team of Vermont municipalities (large and small) that have completed projects, filed for the tax incentives, and received refunds from the IRS!

Debt Capacity Calculator

Most municipalities, especially the small ones, avoid debt whenever possible and see it only as a necessary evil.  But is it?  There are times when debt makes a whole lot of sense and it can pencil out without overburdening your taxpayers.  

In this spirit, VLCT created a Debt Capacity Calculator* to help local officials figure out how much they can afford to borrow and what a new project would mean for their yearly loan payments (debt service) and budget. It shows:

  • how much of the budget is already going toward existing loans and whether taking on more debt is prudent.
  • your legal debt limit, how much borrowing capacity you have left, and how your current and proposed debt compare to your property values and annual revenues.

Use this simple, easy tool to plan ahead for future projects, track existing debt, and explain financial decisions to your residents in clear, relatable terms.

It’s a helpful resource for Selectboard meetings, capital planning discussions, bond votes, and public presentations.

Consider adding the Municipal Tax Rate Calculator* as a sheet on this tool and then you can toggle back and forth to also understand how your debt may impact your tax rate/budget!

 

Give it a try!

VLCT Debt Capacity Calculator*

 

*This tool is to be used for informational and general guidance purposes only. It is your responsibility to verify the results, adapt the tool to your specific circumstances, and ensure that any data entered is accurate and appropriate for your intended use. By using this tool, you acknowledge and agree that any reliance you place on its functionality or outputs is strictly at your own risk.  Use at your own discretion.

Publication Date
06/12/2025

Municipal Tax Rate Calculator

Ever wonder what effect a penny more or less on the municipal tax rate would have on the tax bill of an average value home? Or how severely (or not!) a bond payment would affect your property owners? Well, now you can stop wondering and use VLCT's free, easy tool for Vermont municipalities to quickly estimate their municipal tax rate.​

Features​

  • Enter your Grand List value and amount to be raised by taxes and the average assessed value of a home​

  • Calculates your base municipal tax rate​

  • Shows the value of one cent on the tax rate​

  • Estimates the municipal tax on an average home value​​

     

Why Use It?​

  • Quick check on rate options during budget, bond, and tax rate setting discussions​

  • Useful for Selectboard meetings, budget hearings, and public presentations​

  • Helps estimate the tax effect of adding or removing dollars from the budget

 

Give It a Try!*

VLCT Municipal Tax Rate Calculator *

 

IRL (In Real Life!) 

Example Tax Calculator #1

Example Tax Calculator #2

 

*This tool is to be used for informational and general guidance purposes only. It is your responsibility to verify the results, adapt the tool to your specific circumstances, and ensure that any data entered is accurate and appropriate for your intended use. By using this tool, you acknowledge and agree that any reliance you place on its functionality or outputs is strictly at your own risk.  Use at your own discretion.

 

Publication Date
06/05/2025

Is the Board of Auditors an Advisory or Non-Advisory Public Body for Purposes of Vermont’s Open Meeting Law?

May 07, 2025

Vermont’s Open Meeting Law (1 V.S.A. §§ 310-314) provides that “[a]ll meetings of a public body are declared to be open to the public at all times, except as provided in section 313 of this title [on executive sessions].” 1 V.S.A. § 312(a). The intent of the law is to create transparency in government by requiring advance public notice and an opportunity for public participation in governmental decisions. The law applies to every “public body” of a municipality. A public body is any board, council, commission, committee, or subcommittee of a municipality, which includes the Board of Auditors. 1 V.S.A. § 310(4).  
 

The Distinction Between Advisory and Non-Advisory Public Bodies

With the passage of Act 133 in 2024, the law now draws a distinction between advisory and non-advisory (decision making) public bodies by imposing stricter requirements on the latter. The law defines an “advisory body” as a “public body that does not have supervision, control, or jurisdiction over legislative, quasi-judicial, tax, or budgetary matters.” 1 V.S.A. § 310(1). Though not explicitly defined by the law, a “non-advisory body” is a decision-making body, one that does have supervision, control, or jurisdiction over legislative, quasi-judicial, tax, or budgetary matters. An advisory body, by its very name, advises, which means that it lacks final statutory decision-making authority. If a body has final decision-making authority over any legislative, quasi-judicial, tax, or budgetary matter then it is categorically not an advisory body, which makes it, in turn, a decision-making body.  

The elected Board of Auditors plays an important role in preserving the democratic nature of Vermont’s local government by ensuring that local officials are accountable for their expenditures of taxpayers’ money. It is the auditors’ job to review the accounts of local officials and report their findings directly to the taxpayers for review. VLCT’s Municipal Assistance Center (MAC) considers a Board of Auditors to be a “non-advisory” body because, whether they exercise it or not, the auditors also have final statutory decision-making authority over the selectboard’s compensation. “When a town does not fix the amount of the compensation to be paid such officers and town employees, the selectboard shall fix and determine the same except as to their own pay which shall be fixed by the auditors at the time of the annual town audit…” 24 V.S.A. § 933. 

In contrast to advisory bodies, non-advisory bodies, such as the Board of Auditors, must electronically record their meetings and post the recordings in a designated electronic location for a minimum of 30 days following the approval and posting of the official minutes of the meeting that was recorded. They also must hold their meetings at a staffed, physical location, with the exception of emergency meetings or meetings held during a local incident or state of emergency, all of which may be held entirely remotely. Please see our 2024 Open Meeting Law Changes Act 133 FAQs for more information about the differences between advisory and non-advisory bodies. 
 

Some Meetings of the Board of Auditors Are Exempted

Not all meetings of the Board of Auditors though are open to the public. The Open Meeting Law does not apply to “[r]outine, day-to-day administrative matters that do not require action by the public body.” 1 V.S.A. § 312(g). Although not further defined in statute, “routine administrative matters” would seem to include activities such as reviewing financial statements and collecting information from other town officers. Actions and discussions that fall within 1 V.S.A. § 312(g) are not “meetings" under the Open Meeting Law, even if two or more of the elected auditors are present or participating. Therefore, if the elected auditors choose not to do their work individually, they may legally work in groups of two or three to conduct these activities and may do so outside of a publicly warned meeting.   

Be aware that not all of the auditors' activities will fall under this exception to the Open Meeting Law. The exception only applies to matters that “do not require action by the public body.” 1 V.S.A. § 312(g). As such, the exception does not apply to official actions that the auditors are required to take by statute. Examples of such official actions include adoption of the audit report and the meeting to “examine and adjust the accounts of all town officers" that is required by 24 V.S.A. § 1681. These official actions may only be taken within the context of a duly warned open meeting that meets all of the requirements of the Open Meeting Law.  

If the town has voted to eliminate the office of elected auditor and has hired a public accountant, the public accountant is not subject to the Open Meeting Law. 

Funds Transfer Fraud is a Preventable Risk!

April 10, 2025

In recent months, PACIF has seen an increase in the number of claims resulting from funds transfer fraud being conducted successfully on members of all sizes. Aside from the fact that these claims are preventable by using some simple practices, PACIF’s crime coverage is limited to $50,000 per occurrence – which might not cover an entire loss.  

This guidance explains what funds transfer fraud is and lists basic prevention measures that anyone with access to municipal accounts should use to avoid falling victim to these schemes. 

A “funds transfer fraud” claim stems from when a municipal official or staff member who, deceived by a fraudulent instruction, transfers municipal funds to a third party that is not entitled to the payment. These instructions most commonly arrive in emails, but they may arrive – or some element of the fraud may be conducted – by phone, text, or mail.  

Examples of common claim scenarios include: 

  • The finance staff receives an email that appears to come from an employee who is requesting that their direct deposit account be changed to a different account or financial institution. This may even use the member’s own request form. The finance staff member makes the payroll change and unknowingly is now depositing the employee’s payroll check into a criminal’s account. 
  • Unbeknownst to the municipal official or staff member, their email account has been infiltrated and is being monitored by a criminal, who notices that a financial transaction is occurring between the municipality and a vendor or contractor. At some point during the communication, the criminal inserts themselves into the communication thread and generates an invoice or request for payment that appears to be legitimate. They often will ask that depository information be changed. When payment is made, it goes to the criminal instead of the legitimate vendor. 
  • A municipal staff member receives a request from a (fraudulent) vendor who requires a change to their bank depository information. The staffer, trying to apply due diligence, asks the vendor to provide the request on their company letterhead, and the bogus vendor complies using a spoofed copy of the legitimate vendor’s letterhead. The staffer is deceived and makes a payment to the fraudulent vendor. 
  • Municipal staff responsible for finances receive an email or other communication that appears to come from the municipal manager, selectboard chair, or another person who could legitimately request a funds transfer. The communication asks that funds be transferred immediately to a specific account to address an urgent need. But the initial communication was a bogus request, so when the funds are transferred, they land in the criminal’s account. 

While there are variations on the theme, the scams all involve moving money from one account to another in what appear to be legitimate situations. Some scenarios include an element of urgency, such as an account being overdue or an urgent communication from a “municipal official”. Many of them also request a change in bank account information.  

With financial fraud claims becoming more frequent, it is critical that PACIF members establish policies on how to handle these requests when they are received. Below is a list of some basic measures your organization can take to avoid falling victim to this type of fraud. 

  • Verify. When receiving any request to revise bank account information, always verify with the actual requesting party that the request is valid and the account information is accurate. Do this with a separately known means of communication, such as a  known phone number and contact. Never rely on email addresses or phone numbers that are provided within the change request or the accompanying email. 
  • For payroll deposit changes, consider using an app that includes multifactor authentication, or require changes to be requested in person.  
  • Carefully scrutinize requests for changes to bank information, as these should always be viewed with a high level of suspicion. If received by email, hover over the email address to see whether a different email address appears. Never click on links within these emails as they may contain malware or viruses. Even when you are expecting the email, be suspicious and use good phishing prevention tactics such as hovering over links and email addresses to make sure that the email is legitimate. If there is any doubt about the validity of the request, verify. 
  • Suspect any urgent request for a transfer of money. Artificial intelligence is now being used to emulate a person’s voice – so even phone voice message requests must be handled with the same level of scrutiny as email inquiries. Always verify any funds transfer request directly with the person that is allegedly requesting it, using a known phone number. 

These days, being suspicious and on high alert when engaging in any financial transaction makes a lot sense. Implementing some basic financial controls and work practices can go a long way in preventing your municipality from falling victim to funds transfer fraud and having to place a claim to try to recover the lost funds. If we all work together to minimize these claims, PACIF members can help keep their crime coverage rates low and ensure that precious municipal funds go where they’re supposed to go. For more information, reach out to your loss control consultant or contact us at losscontrol@vlct.org. For financial control information, visit www.vlct.org/finance.  

WLR March 17: Crossover Week Activity on Housing, Flood Recovery, Municipal Finance, 3-Acre, and more

Member for

2 years 7 months
Submitted by iminot@vlct.org on

The warming weather tends to speed things along in the State House, and this “crossover week” was no exception. Crossover is the deadline for all policy bills to be reported out of the last committee of reference within each legislative chamber. Hereafter, lawmakers will have more time to work on “money bills” that relate to tax writing or appropriations. This issue of the Weekly Legislative Report provides updates on the House Omnibus Housing Bill (now designated H.479), the Flood Recovery bill (now designated H.397), 3-Acre reform, Reappraisal, the Budget Adjustment Act, and more.

The House Committee on General and Housing advanced its omnibus housing bill by a 10 to 1 vote. The committee bill, newly named H.479, represents almost two months of collaborative and comprehensive work on a variety of housing policies by committee members. The committee heard from VLCT several times and included many of our requests in its final version. The bill supports many of our favorite housing programs, provides new investments in infrastructure, and authorizes a new 1% local option tax for short-term rentals. It also calls for several housing-related legislative studies and seeks to reduce municipal permit appeals for housing projects.  

Here is a quick rundown of what included in this 37-page Housing Bill:  

  • New Short-Term Rental Municipal Taxing Authority: The Committee responded to testimony from VLCT regarding the increasing resource demand on local government to regulate short-erm rentals (STRs) for fire safety, wastewater capacity, and to either promote or restrict this emerging lodging sector according to local needs. This new provision in Title 24 would allow a municipality to assess a 1% tax on STR units by a majority vote at an annual or special meeting warned for that purpose. 
  • Vermont Infrastructure Sustainability Fund: The bill creates a new revolving loan fund to support municipal infrastructure and appropriates $15,000,000 to the Vermont Bond Bank to provide capital to extend and increase capacity of water and sewer service and other public infrastructure in municipalities where the lack of extension or capacity is a barrier to housing development. 
  • Brownfield Investment: The bill calls for a Brownfields Process Improvement report, prioritizes the review of proposals for remediation at sites that contain housing, and repurposes $2,500,000 in General Funds for brownfield assessment and clean-up. 
  • Municipal Permit Appeal Reform: The bill includes a series of amendments under 24 V.S.A. § 4465 that tie standing for land use permit appeals to local bylaw and eliminate standing for petitioners and the so called “neighbor clause” that allowed non-abutting residents to appeal on the grounds of physical or environmental impact on the person’s interest. It will also allow local legislative bodies to adopt bylaw amendments that are required by state law (preemptions) without a hearing and compels the Environmental Division of the Vermont Supreme Court to prioritize hearing cases involving housing development.  

The bill also makes more than $55 million in appropriations to various state housing programs and amends some program criteria, including:  

  • To standardize the grant/loan amounts for the Vermont Housing Improvement Program (VHIP) $50,000 and additional $20,000 for certain conditions and appropriates $4,000,000 to the program.    
  • $2,000,000 to improve mobile home park infrastructure under the Manufactured Home Improvement and Repair Program. 
  • $500,000 grant to the five NeighborWorks America affiliated Home Ownership Centers for the purpose of providing homebuyer education, financial literacy counseling, and foreclosure prevention programs. 
  • $235,000 granted to HomeShare Vermont for the purpose of funding case management positions and an intake coordinator. 
  • $400,000 grant to Cathedral Square to continue the Support and Services at Home (SASH) for All pilot program. 
  • $373,000 grant to the Vermont State Colleges System for the purpose of supporting the creation of new apprenticeships, curriculum development, employer partnerships, and faculty training in the field of heating, ventilation, and air conditioning. 
  • $448,500 grant to the Associated General Contractors of Vermont for the purpose of promoting and expanding their training and certification programs specific to construction and the building trades. 
  • $625,000.00 to the Department of Health for funding of at least three new recovery residences certified by the Vermont Alliance for Recovery Residences and to cover first month fees for individuals entering a certified recovery residence in Vermont. 
  • $27,000,000 to the Vermont Housing and Conservation Board to provide support and enhance capacity for the production and preservation of affordable mixed-income rental housing and homeownership units. 
  • $20,000,000 to the Vermont Housing Finance Agency to continue implementation of the Middle-Income Homeownership Development Program and the Rental Housing Revolving Loan Fund. 

Now, we don’t pick favorites, but we do want to commend the hard work of members on the House Committee on Government Operations and Military Affairs which has passed ten bills out of committee in time for crossover. The committee’s action-packed first half of the session started with the first act of the biennium, H.78, an act related relating to the use of the Australian ballot system in local elections, and ended on Friday afternoon with a unanimous vote (11-0) to advance the Flood Bill, H.397, an act relating to miscellaneous amendments to the statutes governing emergency management and flood response. 

The Flood Bill is considered a “must pass” for the session and includes three amendments proposed by VLCT, as well as a number of reforms targeting support to municipalities to enable the preparation, emergency response, and recovery from flood disasters and other all hazard events.  

The three amendments successfully advocated for by VLCT and our partners at the Vermont Bond Bank would expand municipal authority to: 

  • Create and maintain an Unassigned Fund Balance: Establishing an Unassigned Fund Balance is a prudent practice recommended by numerous auditors and governmental finance professionals that would assist municipalities in cash flow management, stabilize the local property tax rate, improve emergency response, and significantly strengthen their financial resiliency in the case of unexpected negative economic trends.  
  • Borrow for Emergency Response for up to five years of debt service: In the wake of flooding and other all hazard events, municipalities cannot wait to rebuild vital town infrastructure or to restore municipal services. State law substantially limits the authority of local legislative bodies to acquire funding for emergency response as they can only take on debt for up to one year without a town vote, while FEMA public assistance reimbursement can take much longer.  
  • Establish level debt service: Current statute requires municipal loans to be level principal, meaning that debt payments start high and decrease yearly as the cost of interest goes down. Municipalities should have the option to structure level debt by amortizing the debt to allow for consistent repayment amounts. This would help stabilize local property tax bills and is more within the national norms of government borrowing.  

The bill also carries forward a proposal by Governor Scott, which VLCT supports, to appropriate up to $1 million from the current PILOT Special Fund surplus to municipalities that have lost grand list revenue from voluntary flood buyouts. This program would replace the lost municipal portion of property taxes in full for five years and would then step down reimbursements by half in five-year increments, giving communities time to undertake new development projects and restore the lost grand list value. VLCT supports this provision, considering the number of buyout-impacted communities that are also LOT contributors and/or eligible for PILOT.  

VLCT thanks Chair Matt Birong and Vice Chair Lisa Hango for their persistence and collaboration on a number of key priorities for local government this session.  

The Flood Bill will now head to the House Ways and Means Committee, where we expect further amendments, including the addition of VLCT’s proposed change to the LOT withholding formula from 70/30 to 80/20.  

Now that crossover is behind us, the legislature’s focus is all about the money. Committees of jurisdiction have more time to work out the details related to tax writing and appropriations, so in the weeks ahead there will be much debate on how to pay for the various policies and programs proposed in other legislation.  

Back in January, VLCT presented our 2025 Legislative Priorities to members of the Rural Caucus and asked for their support on three key initiatives: transportation funding, infrastructure for housing, and LOT/PILOT surplus reform. Last week the Rural Caucus decided what requests to include in their annual letter to the Appropriations Committees and chose to support VLCT’s request to level fund town highway and bridge and structure appropriations to FY25 levels.  

The House Committee on Environment passed H.481 on a 9-2 vote Friday afternoon. Some of the language in this bill originated in Senator Chittenden’s S.24, which we discussed in past Weekly Legislative Reports.  

This version by the House Environment Committee proposes to amend requirements related to the permitting of stormwater systems in the state. The bill would: 

  • Extend the deadline by which owners of impervious surfaces subject to 3-Acre permits located within the Lake Champlain and Lake Memphremagog watershed must complete permitting to October 1, 2028, and for all other watersheds of the state by October 1, 2038.   
  • Allow municipalities that assume full legal responsibility for a stormwater system to assess municipal impact fees on users of the stormwater system.  
  • Repeal the sunset of the clean water surcharge on the property transfer tax.  
  • Create the Study Committee on the Creation of Regional Stormwater Utility Districts to review the feasibility and benefit of creating regional stormwater utility districts to facilitate implementation and compliance with the water quality laws of the state.  

Taken all together, the provisions in this bill are a step in the right direction toward a more cogent plan for the state to treat 3-Acre sites. However, VLCT continues to propose further reforms of the 3-Acre stormwater permitting rule to consider cost, feasibility, and the effectiveness of phosphorous reduction. As this bill moves toward the Senate, we will call for further amendment to:  

  • allow cost to be a factor in determining the feasibility and approval of engineered treatments, 
  • allow municipalities to separate publicly owned facilities (such as town roads) from private parcels under the permit, 
  • remove dispersed residential neighborhoods without common ownership from 3-Acre regulation, and 
  • only require treatment at the time of redevelopment.  

The House Ways and Means Committee has released another substantially revised version of their Reappraisal committee bill following a slate of testimonies earlier this month by VLCT and VALA members.  

The legislative intent of the new reappraisal proposal is to create a regional system for mass reappraisal on a six-year timeline to ensure that property values on municipal grand lists are kept up to date and accurate, that property data collection is consistent and standardized across the State, and that property valuation is conducted by professional staff – while keeping the authority and responsibility to perform regular grand list maintenance with local listers.  

The proposal creates 12 regional assessment districts that would be overseen by an employee of the Department of Taxes Division of Property Valuation and Review (PVR) who may contract for and oversee reappraisals conducted by outside firms, as well as creates regional boards of civil authority to hear appeals. This most recent draft also eliminates the annual equalization study, raises the per parcel fee for costs related to grand list maintenance to $9.50, eliminates the initial proposal to “claw back” these funds for the transition to regional districts, and eliminates the threat of withholding state funds for noncompliance currently in law. 

The new draft also introduces transition language removing the requirement to conduct ordered reappraisals (effective on passage), ending new reappraisals orders beginning on January 1, 2027, and creating a stakeholder group to be convened by PVR to “advise on the development of guidelines, procedures, and rules to effectuate the requirements of this act relating to property valuation and reappraisals”. 

On Wednesday of last week, the House passed the conferenced version of the annual Budget Adjustment Act (BAA), which was swiftly vetoed by Governor Phil Scott on Friday. In our March 3 Weekly Legislative Report we summarized the last-minute BAA showdown over a proposal by the Administration to strike $1.8 million for an extension of the current General Assistance (GA) cold weather shelter program and instead offer up to $2.1 million in block grants to municipalities to manage the wind down of the motel program.  

In his veto message, Governor Scott made clear that the continuation of the motel program until June 30 is a sticking point, and he expressed mounting concerns related to federal funding and potential future cuts to “critical programs”.  

Now, lawmakers can either attempt a veto override of the current BAA proposal or work toward a negotiated agreement with the Administration. Republican lawmakers have previously expressed support for the governor’s position, making an override unlikely. VLCT will continue to watch for a negotiated package to emerge and maintains that the management of the GA program specifically, and the delivery of human services generally, is a responsibility of state government – not local government. 

Committee bills are advancing, and last-minute amendments are common in the last half of the session. VLCT is monitoring and tracking over 115 bills, and your advocacy team is testifying on the bills most important to municipalities each week. In the weeks ahead there will be many more opportunities for you to help Josh and Samantha in VLCT’s advocacy work. Remember to register and attend our bi-weekly Advocacy Chats, which are held via Zoom every other Monday at 1 PM. 

  • To support VLCT’s advocacy work; participate in policy development, testimony, and legislative actions; or just learn more, reach out to Josh and Samantha by email at jhanford@vlct.org and ssheehan@vlct.org. 

Claiming Tax Incentives for Your Clean Energy Project

The Inflation Reduction Act introduced and expanded tax credits for clean energy technologies over the next decade. The Act included new provisions enabling tax-exempt and governmental entities to access some of the tax credits. Vermont’s municipalities – and agencies and instrumentalities of state and local government, such as fire, utility, and solid waste districts and transportation and public safety authorities – are eligible to file a claim for one or more eligible projects. This resource helps you understand the claims process.

What is Elective Pay (Direct Pay)?

The mechanism to claim these tax credits is called “Elective Pay” (sometimes referred to as “Direct Pay”). Municipalities can receive a payment equal to the full value of tax credits for building qualifying clean energy projects. Unlike competitive grant and loan programs, in which applicants may not receive an award, elective pay allows municipalities to get their payment if they meet the requirements for both elective pay and the underlying tax credit. The municipality implements its eligible project, notifies the Internal Revenue Service (IRS) of its intent to claim the credit, and files an annual tax return to claim elective pay for the full value of the credit. The IRS then pays the municipality the value of the credit. Several Vermont municipalities have used elective pay successfully.

Of the 12 elective pay tax credits, Vermont’s municipalities likely would use the ones for generating clean electricity through solar, wind, and geothermal and for battery storage projects (§ 48; § 48E); installing electric vehicle (EV) charging infrastructure (§ 30C); and purchasing clean vehicles for their vehicle fleets (§ 45W).

For more information about using elective pay on projects that are receiving grants and forgivable loans, see Q41 on the Internal Revenue Service’s Elective pay and transferability frequently asked questions webpage.

Why Apply for Elective Pay?

Elective pay can make it easier for local governments to invest in clean energy and can potentially allow them to take on bigger projects faster. Deploying more clean energy into local communities helps save residents money, cuts harmful pollution, and improves public health.

Example.  The Town of Sheffield installed a 10-kW solar array and battery backup system with the help of Elective Pay and several grants. It filed for its Elective Pay reimbursement when paper filing was the only option. In December 2024, Sheffield received an Elective Pay refund of $32,868. The Town also received an interest payment because its refund took longer than 45 days.

Example. The Town of Walden installed a 17.46 KW system with 36 ground mounted 485-watt panels at its town garage site using local funds and Elective Pay. The project cost was $54,713. The Town filed electronically for an Elective Pay refund in early 2025. In late May 2025, Walden received its Elective Pay refund of $16,414.

How Does My Municipality Apply for Elective Pay?

Municipalities wishing to claim elective pay need to complete the following steps. Please consult the IRS website for the latest information on incentives for:

The IRS summary of the clean electricity credit can be useful.

Confirm that the clean energy project the municipality is building, or wants to build, qualifies for one of the IRA tax credits that are applicable for elective pay. The municipality will need to obtain and retain all necessary documentation to prove it has met the requirements for any tax credits and bonuses its wants to claim. Lawyers for Good Government (L4GG), a nonprofit organization that leverages pro bono attorneys to promote good government, developed a Documentation Checklist to help identify and retain documents needed to claim a tax credit and to help substantiate that a tax filer has met tax credit requirements in case of IRS audit.

In general, US Treasury and the IRS will not provide personalized tax advice on whether the municipality’s project or activity is eligible for a tax credit. These resources can help determine eligibility:

  • The IRS Elective pay and transferability frequently asked questions webpage provides robust information to help the municipality qualify for and claim the credit.
  • The Clean Energy Tax Navigator walks through the process of determining eligibility for Elective Pay. It is designed to be a free, public one-stop shop for tailored Elective Pay information.
  • VLCT recommends municipalities consult with their auditors and a tax advisor.

Municipalities only can use elective pay after they have earn the tax credit. For Investment Tax Credits, the credit is earned during the tax year that the clean energy project is placed in service.

First time tax filers, like municipalities, declare their tax year as part of the tax credit claim process. Most municipalities will choose to use their fiscal year as their tax year, but that is not required. If the municipality declares its tax year as something other than its fiscal year, it will have other obligations, such as reconciling any difference between its regular books of account and its chosen taxable year” (IRS Elective pay and transferability frequently asked questions: Elective pay, Q23). The IRS has stated that there will be an opportunity to re-align tax year to the fiscal year in the future. As of January 2025, the IRS had not issued guidance on the realignment process.

For most governmental entities, the return for a taxable year is due 4.5 months after the end of that taxable year. See IRS Return due dates for exempt organizations - Form 990-T (corporations) to determine when the municipality’s filing is due.

Entities without a filing requirement, like municipalities, also can receive an automatic six-month extension of time to file Form 990-T by using Form 8868, Application for Extension of Time To File an Exempt Organization Return to request an extension. An organization will only be allowed an extension of 6 months for a return for a tax year.

The IRS uses an online portal for the pre-filing registration process. The IRS recommends filing for a pre-registration number at least 120 days (~4 months) before the due date of the municipality’s elective pay return.

First-time users of the portal will need to establish an account. The authorized representative and anyone else who will access the municipality’s account must have or create an ID.me account. ID.me is a digital identity network that allows individuals to securely provide their identity online. Be sure to retain the pre-filing registration account access information as part of the municipality’s files, but do not retain the individual’s ID.me account information. The ID.me account belongs to the individual, not the municipality. If the portal allows the municipality to include two authorized representatives for the account, we encourage you to do this to retain access when personnel change.

After securing an ID.me account, the authorized representative of the municipality registers with the IRS for a Clean Energy Account. This results in receiving a registration number for the project. The municipality uses the registration number to file its elective pay tax return. The applicable credit property should be placed in service prior to submitting a pre-filing registration.

When setting up a Clean Energy Account, the municipality designates a Clean Energy Officer. This is the person who will have access to all the information submitted to the IRS. This person is the sole person who can add other users to the account. This person also is the person the IRS contacts with questions. Using a municipally-designated email address, rather than a personal email address, helps the municipality retain its public records related to the registration.

During the pre-registration filing process, the municipality will need to provide information about itself, the credits it wants to earn, and the eligible clean energy project. The National League of Cities’ publication, 5 steps Toward Successfully Filing for the IRA Elective Pay Provision for Local Clean Energy Projects, includes a list of information you need and provides some lessons learned to help smooth your registration process.

In general, each registration number corresponds to one clean energy property in one tax year. This means that if the municipality purchases an electric vehicle and installs an electric vehicle charging station in the same tax year, it must file for two registration numbers – one for each project. 

A registration number is only valid for the taxable year for which it is obtained. If the municipality files for a registration number in one tax year and its project is placed into service in the next tax year, it will need to renew the number. Receipt of a registration number does not guarantee that a project is eligible for a credit. It simply gives the IRS information it needs to process the credit when the municipality files for it.

Q32 through Q40 on the IRS Frequently Asked Questions webpage provides more information about pre-filing registration.

The municipality will need to provide its registration number and make the elective payment selection on its tax return. The tax return filing will include at least three forms: Form 990-T, Form 3800, and the form(s) for the credit(s) being claimed. Form 990-T is used by tax exempt entities to report unrelated business income and tax liabilities. The municipality files one Form 3800 and one Form 990-T regardless of the number of clean energy projects it completes. E-filing the claim is required for tax exempt entities.

The Lawyers for Good Government (L4GG) Elective Pay & IRA Tax Incentives webpage has resources to guide you through filing for the credit. This has become the go-to information source for local governments. Access is free. Some of the resources available include:

  • Annotated tax forms – Learn which forms must be filed, what information goes where on the forms, and which sections of the forms need to be completed. Note: The IRS updates its forms annually. The annotated forms are 2023.
  • Elective Pay FAQs – The FAQs are searchable. If you don’t find what you need, you can submit a question then watch for the answer on the FAQ page.
  • Municipal Bond “Haircuts” – If your municipality used tax-exempt municipal bonds to finance its clean energy project, the value of the credit will be reduced because the municipality already has taken advantage of a tax exemption through the bond.

The value of your elective pay filing cannot exceed the eligible cost of your project, minus any grants and donations received.

Find more filing tips for tax-exempt organizations at Charities and nonprofits | Internal Revenue Service.

Note: According to the National League of Cities, the IRS encourages municipalities to eFile (think TurboTax and QuickBooks), but providers of the eFiling platform for elective payment are limited, and so filing via paper to the 990-T repository address provided on the IRS website may be necessary. At least one Vermont municipality has filed successfully using TAX 1099, a for-fee e-filing platform that includes a per-form cost. VLCT is not endorsing any of the e-filing providers mentioned, only providing information.

In general, payments occur after a return is successfully processed. Statutorily, organizations aren’t entitled to the elective payment until the due date of the return (a.k.a. deadline to file). Payments typically are issued within 45 days after that date. In some cases, payment may take less or more time. Payments are sent either electronically or via mail.

Entities that make an elective payment election could potentially be selected for an IRS audit. Be sure to retain all documentation as noted above.

Elective pay payments are a tax refund. As a refund, they are considered as local funds upon receipt and are not reported on the municipality’s Subrecipient Annual Report.

Sample Timeline for Claiming Elective Pay for Most Organizations with a Calendar Tax Year

 

Any time in 2024

 

Late 2024 or early 2025, before tax return is due

 

By May 15, 2025 (for most tax-exempt and governmental entities)

 

After return is processed

»

»

»

Clean energy project is placed in service

 

Pre-register with IRS

 

Deadline to file tax return (if you don't file for an extension)

 

Receive elective payment from the IRS

This example timeline is for projects that were placed into service in 2024.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, significantly reshaping the landscape of federal energy tax credits. Several provisions in the Act directly affect local governments and municipal energy initiatives. See VLCT's web resource, Key Changes to Tax Incentives for Municipal Energy Projects, for key changes, deadlines, and eligibility modifications relevant to municipalities.

 

Have Additional Questions?

To learn more about elective pay and how to claim a tax credit for a municipal project, visit:

Disclaimer:  This summary provides information about tax credits and deductions available to municipalities through the Inflation Reduction Act of 2022. Information was drawn from information previously posted on the Biden Administration whitehouse.gov Direct Pay Through the Inflation Reduction Act webpage, the IRS’s Elective pay and transferability frequently asked questions webpage, and Lawyers for Good Government’s Elective Pay & IRA Tax Incentives webpage. Links to sites offered in this document are provided to assist municipalities. The inclusion of a link does not imply endorsement or approval of the linked site. The content of this document does not constitute legal or other professional advice. Municipalities are advised to consult tax, legal and other professionals regarding use of these credits. If a municipality intends to use elective pay for a clean energy project, the municipality is advised to monitor potential Congressional changes before proceeding with project development.

Publication Date
08/27/2025
Subscribe to Finance