Finance

SAM.gov is the federal government's official system for entity registration and award management. If your municipality applies for federal grants, receives federal funding, or works with federal agencies, maintaining an active and accurate SAM.gov registration is an important administrative responsibility.

Many Vermont municipalities encounter questions about renewing registrations, managing entity administrators, or responding to validation and compliance requirements. While these processes are essential for accessing federal funding opportunities, they can also be confusing and time-consuming.

VLCT has developed a variety of resources to help local officials navigate SAM.gov requirements. This page brings those resources together in one place, providing guidance for every stage of the process—from obtaining a UEI and completing an initial registration to renewing your account and resolving common issues.

Whether you are setting up a new municipal registration, preparing for a grant application, or troubleshooting an existing account, these resources can help you understand requirements, avoid common pitfalls, and keep your municipality eligible for federal funding opportunities.

Use the links below to find the information most relevant to your situation.

The federal Inflation Reduction Act (IRA) of 2022 opened federal tax credits and incentives to municipalities and other tax-exempt entities through a mechanism known as "Elective Pay". Eligible local governments may receive the value of certain federal tax credits as a refund payment from the Internal Revenue Service (IRS), helping offset the cost of qualified energy projects, such as solar arrays, energy storage, geothermal projects, and others.

For Vermont municipalities, Elective Pay can help make investments in clean energy, energy efficiency, vehicle electrification, and other eligible projects more affordable, making Elective Pay an important funding tool to include in your planning process.

Because Elective Pay is tied to federal tax credits, the rules, eligibility requirements, documentation standards, and filing procedures can be complex. Municipal officials often need to understand not only whether a project qualifies, but also how to meet federal requirements throughout project planning, procurement, construction, and reporting.

This Resource Center brings together VLCT guidance and articles to help municipalities:

• Understand how Elective Pay works.
• Identify projects that may qualify for federal tax credits.
• Understand prevailing wage, apprenticeship, and other program requirements.
• Learn about changes that have occurred since 2025.
• Learn about pre-registration, filing, and compliance requirements.

The information provided here is intended to support municipal decision-making and project planning. Because federal guidance may change and each project presents unique circumstances, municipalities should consult current IRS guidance and seek professional tax, legal, or financial advice when appropriate.

Explore the resources below to learn how Elective Pay may help your municipality advance energy projects while reducing local costs.

Vermont law provides that money held in trust by a town for any purpose, including cemetery trust funds, shall be under the charge and management of trustees of public funds unless the person giving the funds directs otherwise. 24 V.S.A. § 2431. It also provides that the income derived from investment of the money must be applied by the trustees to the purpose for which the trust is held. 24 V.S.A. § 2432(a).

Given the fiduciary position held by the trustees of public funds, it is important that they adopt a policy to guide their actions and investment decisions. The primary purpose of such a policy should be to strike a balance between risk and return while following a conservative investment approach that provides appropriate income to meet the trust’s objectives. The model investment policy for trustees of public funds establishes investment objectives, standards of investing prudence, eligible investments, reporting requirements, and safekeeping and custodial procedures necessary to properly manage and invest trust funds.

When seeking guidance on investment of trust moneys, trustees should look first to the trust document. Frequently, one who places money in trust with a town also places conditions on how and where such trust moneys can be invested. Trustees must also follow Vermont law, which establishes specific investment vehicles appropriate for investment of town trust moneys. These investment requirements are set out at 24 V.S.A. § 2432(b) and in the model policy.

For additional information, see the discussion of the Model Investment Policy. For more information on municipal investment policies, please refer to Financial Policies: Design and Implementation, published by the Government Finance Officers Association. A copy of this document can be purchased at www.gfoa.org.

Accounting, Auditing, and Financial Reporting Policy Guidance

The VLCT Municipal Assistance Center developed this model accounting, auditing, and financial reporting policy to help municipalities effectively manage government finances. Voters approve a budget and hold the municipal officers accountable for its proper management. If officials don’t know how financial resources are being used, or whether they are being used to accomplish the voters’ goals as represented in the budget, those officials have failed to fulfill their important role as stewards of public funds.

An accounting, auditing, and financial reporting policy sets the tone for fulfilling this stewardship role. Every town should aspire to establish and maintain high standards for its accounting practices. Such standards inspire confidence in the financial information that is produced and presented to voters. They enable the voters, selectboard, and other officials to make sound decisions in preparing and adopting the town budget and managing town finances.

The following should be considered in the development of an accounting, auditing, and financial reporting policy:

Accounting Standards. Vermont statutes provide no legal standard for municipal government accounting. Unfortunately, the lack of a common standard has resulted in a wide variation in accounting practices among Vermont municipalities. For municipalities seeking to standardize their accounting practices, the generally accepted accounting principles (GAAP) for local governments, established by the Governmental Accounting Standards Board (GASB) are a helpful guideline. GASB is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. GASB is generally recognized by governments, the accounting industry, and capital markets as the official source of generally accepted accounting principles for state and local governments.

The generally accepted accounting principles for local governments promulgated by GASB can assist municipalities in providing officials and voters with financial statements that can be analyzed and compared from period to period. It also provides comparability across municipalities, something that cannot be accomplished now with the variety of reporting formats used throughout the state. There is also less room for error and fraud when specific uniform standards are applied to the accounting process. This adds up to better reporting, more accountability, and, one hopes, more informed and supportive voters.

Compliance with GAAP requires the establishment of a fund accounting system and measuring the financial position and results of operations using the modified accrual basis of accounting for governmental fund types and the accrual basis of accounting for proprietary and fiduciary fund types. For more information about GASB and GAAP for local government, please visit www.gasb.org.      

Independent Auditing. Hundreds, if not thousands, of transactions are posted to town books each year, including complex payroll and benefits payments. While compliance with generally accepted accounting practices helps ensure that transactions are accurately booked and reported, mistakes and even fraud can still occur. Independent auditors can review the municipality’s accounting system, along with the town’s internal controls, and conduct field tests by taking transactions from a trial balance (listing all account balances including revenues, expenses, assets, and liabilities) and tracking down the source documents to be sure that everything has been processed properly and recorded correctly.

The purpose of this review is to determine if the financial statements are free of “material misstatement.” In this regard, an independent auditor will offer an opinion on whether or not the financial statements fairly represent the true financial condition of the town. A management letter is also provided, reporting any material weaknesses in the accounting system – things the auditor considers important enough to be addressed and corrected, such as inadequate documentation of payments being processed or bank accounts not being reconciled. Other reportable conditions that are not deemed to be material are also listed in the management letter and may include items such as lack of an approval process for journal entries or inadequate documentation of accounting processes.

Vermont law requires that a town have auditors, whether appointed or elected. These officials are charged with examining the accounts of town officers and reporting their findings in writing to the voters through the annual town report. 24 V.S.A. §§ 1682, 1683. The amount of time auditors must give to perform their duties depends upon the size of the municipality and the complexity of its budget. The responsibilities of the office may exceed the capacity of local volunteers, and some municipalities have been unable to find persons willing to hold the office. In such instances, a town may vote to eliminate the office of auditor. 17 V.S.A. § 2651b. If the town does vote to eliminate the office, the selectboard must contract with a certified public accountant or public accountant licensed in this State to perform an annual audit of all town funds. 

Even where local auditors have not been eliminated, it is a good practice for municipalities to have their financial statements regularly audited by an independent accounting firm. An outside auditor can be hired upon motion of the selectboard or vote of the town. 24 V.S.A. § 1690(a). In addition to determining whether the financial statements are fairly presented in accordance with GAAP, an outside audit will also review a town’s procedures and internal controls for weaknesses or deficiencies and make recommendations for improvements. While it is helpful to have an independent audit prepared on an annual basis, such a service can be expensive and not every town can afford to have an audit every year. Accordingly, the policy should specify the frequency of the independent audit.

Financial Reporting. In practice, Vermont local government typically follows a four-step

Financial management process centered on the annual town budget. The selectboard, usually with input from the town treasurer, undertake preparation of the proposed budget prior to the annual town meeting. The budget is adopted by the voters at the annual meeting and is managed through the fiscal year by the selectboard and other municipal officers having authority to draw orders on the treasurer. Finally, the auditors evaluate the performance of these officers and report this information back to the voters through the town report.

The selectboard carries out its responsibility to manage the town budget under its authority to approve orders for payment of town funds. 24 V.S.A. §§ 1576, 1621, 1622. In order to do so, the selectboard must have timely and accurate information about the status of the town’s finances. The treasurer is obligated to keep accounts “of moneys paid out by him for the town,” and such accounts “shall at all times be open to the inspection of persons interested.” 24 V.S.A § 1571. The treasurer is also required to provide quarterly reports to the selectboard regarding these actions, and “annually on or before June 30th provide the selectboard the State Auditor of Accounts document regarding internal financial controls.” 24 V.S.A. § 1571(c),(d).

Additional financial reports are important because they give the selectboard and other officials a snapshot of where the municipality stands financially at any given point in time. A Budget Report shows where the town stands in relation to its budget. It is a report of revenues collected and appropriations expended with a column for the variance in each line item – how much the town is either over or under what was budgeted. The Statement of Revenue, Expenditures, and Changes in Fund Balance details revenues and expenditures and shows the difference between the two – either a surplus if the town has more revenue than anticipated or a deficit if it has more expenditures. It shows the beginning fund balance and adds the surplus (or subtracts the deficit) to give the ending fund balance. The Balance Sheet shows the municipalities’ assets, then looks at those assets in terms of the amount that is debt (liabilities) and the amount that is not debt (fund balance). The fund balance reflected on the Balance Sheet should match the ending fund balance from the Statement of Revenue, Expenditures, and Changes in Fund Balance.

The town’s annual report should include financial statements prepared in conformance with GAAP reporting principles, as well as additional disclosures necessary for the complete understanding of the financial statements presented. The report should also include a narrative discussion to explain how the town’s current financial position and results of operations compare with the prior year and with the budget (management discussion and analysis). It may also be helpful to provide statistical data over a ten-year period to provide a longer-term trend analysis of financial changes.

Adopting a Local Option Tax (LOT) creates a dedicated local revenue source that can reduce pressure on property taxes and help fund local priorities. For many communities this can help balance the financial responsibility for maintaining its municipal infrastructure and amenities without placing added property tax burden on its residents.  In Vermont, municipalities can adopt local option taxes on sales, meals, alcohol, and rooms (hotel/lodging), but only after voter approval. The information that follows will help you understand what Local Option Tax is and if it is something you want to adopt for your municipality. 

Background:

For many years, Vermont municipalities needed both voter approval and special authorization from the Legislature (often through charter changes) to adopt local option tax(es).  This made adoption burdensome, slow, and inconsistent throughout the state.  Most commonly, it was the communities with strong tourism economies, and typically more staff capacity, that pursued local option taxes – nonresidents and visitors would be the major contributors to this revenue source. 

During the 2024 legislative session, VLCT advanced a long-held municipal priority: authorizing all municipalities to adopt a local option tax (of one percent (1%) on sales, rooms, and/or meals) through a vote at an annual or special town meeting.  Municipalities can now choose to approve all three, none, or any combination of local option taxes to address municipal revenue needs – they choose, not the legislature. The authorization includes a relief valve that allows the Vermont Tax Commissioner to reject or delay implementation of any more than five (5) new municipal local option taxes in a calendar year.

What is Local Option Tax?

Local Option Tax (LOT) is a way for municipalities in Vermont to raise additional revenue. A municipality may vote to levy the following 1% Local Option Taxes in addition to state business taxes:

• 1% local option tax on sales, in addition to the State’s 6% sales tax rate 
• 1% local option tax on meals and alcoholic beverages, in addition to the State’s 9% meals tax and 10% alcoholic beverage tax rates. If adopted, both meals and alcoholic beverages must be subject to LOT. A municipality wishing to adopt a LOT on meals must also adopt the LOT on alcoholic beverages, and vice versa. 
• 1% local option tax on rooms in addition to the State’s 9% rooms tax rate
• Local Option Tax does not apply to the sale or rental of motor vehicles which are subject to the motor vehicle purchase and use tax.
• LOT on sales applies only to sales of items that are subject to the Vermont sales tax.

Why Adopt Local Option Tax(es)?

Since the 2024 legislative change, there has been a noticeable increase in towns considering local option taxes. Communities cite several reasons:

• Rising infrastructure costs 
• Flood recovery and climate resilience needs 
• Public safety and capital projects 
• Desire to reduce pressure on property taxes 
• Less federal and state grant programs available to fund local priorities
• Ability to collect revenue from tourists and visitors
• Keeps revenue local
• Provides budget flexibility

LOT Frequently Asked Questions

CHIP funding can only be used for certain project and administrative costs that meet program rules. Knowing which expenses are eligible can help municipalities and developers plan projects, prepare budgets, and avoid delays during the application process. The information below explains the types of costs that may qualify for CHIP support and which expenses may not be covered.

VEPC's CHIP webpage may have additional FAQs related to this topic.

Tax increment financing, often called TIF, is a tool that helps communities support public improvement projects and economic growth. CHIP projects may use tax increment financing to help pay for eligible infrastructure costs that enable housing development. Understanding how tax increment works for CHIP can help communities better plan projects, manage funding, and meet program requirements.

VEPC's CHIP webpage may have additional FAQs related to this topic.

Many CHIP projects involve borrowing funds to pay for important infrastructure improvements. Understanding how debt works can help municipalities make informed financial decisions and plan for future costs. The information below explains how debt may be used in CHIP projects and what municipalities should consider before taking on financial obligations.

VEPC's CHIP webpage may have additional FAQs related to this topic.