Vermont’s 2025 legislative session officially ended just before 9 PM on June 16. For those who made over-under wagers, that means that the school year concluded before the legislative session did.
The VLCT Advocacy team brought home some major wins for local government, including:
- significant expansions to municipal financial authority,
- an upward revision to the local option tax withholding formula,
- the creation of a program to reimburse lost municipal grand list revenue following flood sale,
- a new revolving loan fund for municipal infrastructure,
- the protection of municipal legal trails, and, last but not least,
- the greatest investment in infrastructure and housing in Vermont state history, known as CHIP.
Other incremental successes include:
- a technical clean-up of Vermont’s Open Meeting Law,
- a slow-down of the state’s transition to regionalized property valuation, and
- the creation of a summer working group to look for possible revisions to the 3 Acre Rule.
All in all, VLCT tracked 173 bills introduced for potential impact on municipal government – 25 of which passed – and achieved over 20 bill or amendment introductions for priority issues. In all, the legislature introduced 679 bills and 97 passed one or both chambers by the end of the veto session. Of those passed, 84 were signed by Governor Scott or he allowed them to become law without his signature, and five were vetoed.
In this Legislative Wrap-Up, we recap the new laws that will have the greatest effect on municipal authority and funding. Next month, we will explain this year’s summer study committees and write about unfinished business that VLCT will take up in the second half of the biennium.
The session began with the new legislature on shaky ground.
In the November election, incumbent Republican Governor Phil Scott enjoyed his largest margin of victory yet when he was elected to a fifth term, while the Democrats’ supermajorities were broken in both the House and Senate. In the House, fully one-third of the chamber turned over, as 51 freshman representatives took office, and the Speaker herself faced a challenge by Independent Representative and Rural Caucus Co-Chair Laura Sibilia. When it all sugared off, the House returned to work with Speaker Krowinski restored to her office and minimal changes in committee leadership. However, an untested slate of majority leaders took over, including Lori Houghton (D-Essex Junction) as Majority Leader and Karen Dolan (D-Essex Junction) as Assistant Majority Leader.
In the Senate, the substantial partisan shift to 13 Republicans and 17 Democrats required a round of musical chairs – because only five former chairs of the Senate’s 11 standing committees returned to the State House this year, and nearly two-thirds of all Senators had previously served just one term or none. President Pro Tempore Philip Baruth described the changes as “astonishing evolution”. Only incumbent Senate leaders Ginnie Lyons and Ann Cummings returned to their chairships on Health and Welfare and Finance, respectively, and Pro Tem Baruth made the controversial decision to create a fully bi-partisan Education Committee with three Republicans, three Democrats, and Seth Bongartz (D-Bennington) serving as Chair.
Partly by necessity and partly from electoral trepidation, the legislature took off at a snail's pace. By the first bill deadline February 21 the (later failed) budget adjustment was still in nascent stages, and only 170 bills had been introduced – with no first drafts of what would become the year’s landmark policies for healthcare, housing, and education reform.
By crossover week (March 10-14), it was clear that lawmakers would at least make a sincere attempt to deliver voters’ top priorities to lower property taxes and build new housing – but were still far behind the normal legislative pace. The major highlight of crossover week was the first unanimous passage of S.127, the Senate’s housing package that ultimately carried the Community Housing and Infrastructure Program (CHIP) to the finish line.
Early spring brought wide divisions between House and Senate leadership on both housing and education reform. It also featured the first round of vetoes by Governor Scott over what would prove to be irreconcilable differences around the proposed extension to the General Assistance Emergency Housing Program (aka the motel program) in the Budget Adjustment Act.
At times, it seemed that even technical and straightforward legislation might be doomed amid the claustrophobic atmosphere developing around the respective housing and education packages. Successive policy committees struck, amended, and waffled back and forth on VLCT’s simpler proposals to protect legal trails, allow amortized bond payments, resolve the rapidly accruing PILOT fund surplus, and fund municipal technical assistance and town highway paving in the regular budget. The critical flood omnibus bill, H.397, slugged along, stuck behind other must-pass bills for which the Senate struggled to find majority support – notably the gigantic education-reappraisal-property class mega bill, H.454. Meanwhile, the House Ways and Means Committee was making a hatchet job of VLCT’s number one priority, housing bill S.127.
Big fights advanced into incremental victories, and by what should have been the week of adjournment (May 30th), all eyes were on the housing and education conference committees working toward agreement on S.127 and H.454, respectively.
In the end, the legislature did agree and passed S.127 during the regular session. With Governor Scott having already signaled that he would sign it, this effectively created the historically greatest state investment in housing in history, to be implemented through the new Community Housing and Infrastructure Program and a complementary new revolving loan fund for municipal infrastructure. Unable to agree on H.454, the legislature entered a “token session” on June 11, allowing the education conference committee to continue to meet until the scheduled veto session on June 16, where H.454 was finally passed and the session officially adjourned.
VLCT has the proud and unique distinction of having supported passage of Act 1 of the 2025 session.
Bill H.78, an act relating to the use of the Australian ballot system in local elections, was also supported by our colleagues in the Vermont Secretary of State’s office and the Vermont Clerks and Treasurers Association. It began in the House Government Operations Committee and swiftly passed both chambers before Governor Scott signed it into law on February 13, 2025 – just in time for Town Meeting Day.
Act 1 allows the use of an Australian ballot for any or all elections of municipal officials – which is just the remedy we need for towns that vote for most officers by ballot but some (such as moderator) by voice vote. Municipalities may now elect town officers using mixed methods of voting during an annual or special election.
Act 1 Effective Date
The Act took effect on passage, February 14, 2025.
In the closing hours of the regular session, the Vermont House of Representatives passed by a wide majority, 137-2, and the Vermont Senate passed unanimously, bill S.127, an act relating to housing and development, which includes the Community Housing and Infrastructure Program (CHIP).
When implemented, CHIP will be the most significant investment in municipal infrastructure in state history, allowing up to $200 million per year of tax increment financing annually for ten years to be spent by Vermont communities on infrastructure that will serve a public good and support the development of new housing. Over the next decade, CHIP will create thousands and thousands of new homes. Joint Fiscal Office modeling projects that if the program is fully subscribed, it could add at least $600 million to the state’s flailing education fund by 2059 without raising taxes or rates on existing homeowners and renters.
Before we go into detail about CHIP, we must point out that Act 69 also carries a number of other VLCT priorities and important new initiatives to support fair, affordable housing for all. Here is the breakdown:
- Vermont Infrastructure Sustainability Fund. This new revolving loan fund was proposed by Governor Scott. It appropriates $7.5 million to the Vermont Bond Bank to provide capital to municipalities to extend and increase the capacity of water and sewer service and other public infrastructure where the lack of extension is a barrier to housing development.
- State Housing and Residential Services Planning report. The Department of Housing and Community Development will support a summer study committee tasked with generating a plan to develop housing for individuals with developmental disabilities.
- Residential rental applications. The act expands the enumerated list of identification a potential renter may provide on a rental application for the landlord to conduct a background or credit check.
- Fair housing reforms. The law makes a number of changes in order to expand fair housing protections regardless of a person's citizenship or immigration status.
- DHCD Land Bank report. On or before November 1, 2026, the Department of Housing and Community Development shall issue a report outlining a legal framework for implementation of a State Land Bank. Land banks are quasi-governmental entities empowered to make vacant, abandoned, deteriorated, and tax delinquent properties productive again. The report shall include proposed legislative language specific to: (1) the creation and ongoing administration of a statewide land bank; (2) the authorization of regional or municipal land banks; and (3) the identification of funding proposals to support the establishment and sustainability of each separate model.
- Brownfield process improvement. The law calls for a report on recommendations to make the Brownfields Reuse and Liability Limitation Program substantially more efficient. It also directs the Agency of Natural Resources to prioritize brownfield cleanup on housing development sites.
- Management of development soils (aka “dirty dirt”). Municipalities and developers have long reported that state regulations for inorganic pollutants in urban soils and the limited options for the disposal of contaminated soils are driving up the cost of critical housing and infrastructure projects. The law allows contaminated soils to be managed at any site permitted and approved by the Secretary of the Agency of Natural Resources (ANR), and as part of their biennial report to the legislature, the Agency of Natural Resources will include details on the status of the management of development soils in the state, the number of certified categorical solid waste facilities, a summary of how development soils are managed, and an estimated public cost. This change would effectively allow for what is commonly called a “stump dump”, or a permitted location where inert, contaminated materials may be disposed – rather than requiring that all contaminated soils be disposed at Vermont’s one landfill or shipped out of state at greater cost to the development.
Community Housing and Infrastructure Program
The Community Housing and Infrastructure Program (CHIP) will forever change Vermont’s approach to the financing of public infrastructure and housing. It will bring billions of dollars of public investment to communities across the state and facilitate the construction of thousands of new homes of all types. Thanks to its brilliant architecture – and the dogged advocacy of a large coalition of experts, advocates, local leaders, and lawmakers – CHIP will serve communities large and small and drive this historic level of investment while raising new revenues without raising taxes.
Following months of vociferous debate and testimony, here are the features of the program as passed in 2025.
Which Municipalities and Projects are Eligible
- All cities and towns are eligible regardless of Act 250 exemption status.
- Any housing or mixed-use project can be eligible as long as it is 60% housing or the development meaningfully addresses the purpose of the program to “encourage the development of new primary residences for households of low and moderate income across both rural and urban areas of all Vermont counties”.
How Much Money is Available
- Market rate developments can use no less than 85% of new municipal tax increment and no more than 75% of education tax increment for a period of up to 20 years to repay the cost of infrastructure.
- Developments that are deemed by the Vermont Economic Progress Council (VEPC) to be affordable – meaning that 15% of the units are affordable for renters up to 80% AMI or for homeowners up to 150% AMI – may use no less than 85% of new municipal tax increment and no more than 85% of education tax increment, also for a period up to 20 years.
- VEPC may approve up to $200 million in aggregate lifetime education property tax increment retention per year for all projects – which amounts to up to $2 billion in state investment over the initial 10-year period of the program.
- Municipalities may commit up to 100% of municipal tax increment retention.
- Debt for the infrastructure investment may be acquired by the municipality, by the developer, or by a third-party “sponsor” that can be an independent agency that meets state lending standards.
Other Guardrails
- All market rate projects must meet the “but for” test, demonstrating “whether the infrastructure improvements proposed to serve the housing development site and the proposed housing development would not have occurred as proposed in the application or would have occurred in a significantly different and less desirable manner but for the proposed utilization of the incremental tax revenues”.
- Affordable developments are exempt from the “but for” requirement.
- In the Infrastructure Agreement, the municipality and developer must provide that any housing unit within the development be offered exclusively as a primary residence for the period of indebtedness, and this provision can be satisfied biennially by providing a landlord certificate or homestead declaration.
- The program is set to sunset in 2035, and there is no TIF sunset included.
When CHIP Will Be Available
- VEPC shall issue rules and guidance to the legislature by November 15, 2025.
- VEPC testified that the program should be able to accept applications for approval as soon as January 2026.
- VEPC is required to approve or deny an application not later than 90 days following a site visit.
- Approvals of developments financed by CHIP could commence as early as May 2026.
Act 69 Effective Dates
This act takes effect on July 1, 2025, except that Section 4 (the Rental Housing Revolving Loan Program) and Section 7 (repeal of Act 181 prospective landlord certificate changes) took effect on passage, June 12, 2025.
The 2025 Flood Bill was introduced by sponsor Representative Teddy Waszazak (D-Barre) and other members of the flood caucus. It passed each committee of jurisdiction unanimously and avoided conference committee before receiving the governor’s support.
The Flood Bill was considered a “must pass” for the session. It includes three amendments proposed by VLCT, as well as several reforms targeting support to municipalities to enable the preparation, emergency response, and recovery from flood disasters and other all hazard events.
VLCT extends appreciation to both committees on Government Operations for supporting VLCT’s requested additions to the bill. Together these additions will substantially expand municipal authorities for financial and budget management and improve emergency response and recovery at the municipal level.
Flood Response and Preparedness
- Annual Report by Division of Emergency Management (DEM). Annually, DEM must provide a report and presentation to the legislature concerning all action items in the all-hazards mitigation plan, which shall: (1) detail response systems during all-hazards events, including communications; coordination among state, local, private, and volunteer entities; and the deployment of state and federal resources; (2) detail the state’s emergency preparedness measures and goals; (3) include templates and guidance for regional emergency management and for local emergency plans that support municipalities.
- DEM Needs Assessment Report. On or before November 12, 2025, DEM shall conduct a needs assessment to identify any additional staffing, resources, technical needs, or authority needed to carry out the provisions of this act.
- Community Resilience and Disaster Mitigation Program. This change makes permanent the voluntary flood buyout program within the Department of Public Safety and requires coordination with the Department of Environmental Conservation.
- All-hazard and weather alert systems for municipal corporations. Requires that DEM assist, when requested by a municipality, with the acquisition of river observation and modeling systems and enhanced weather forecasting and alert systems.
- Emergency powers of the governor. The law expands the emergency powers of the governor to include, in consultation with the Secretary of ANR, the ability to waive certain permits and restrictions that would allow the drawdown of dams in anticipation of a flood event that is likely to cause substantial damage or injury to persons or property.
Municipal Finance
- Local Option Tax formula revised. VLCT testified many, many times in favor of a new 80/20 LOT formula (with which 80% of the local option tax revenues would go to the municipality and 20% would be retained by the state). The law does make an upward revision of the current 70/30 formula to 75/25 – which will mean hundreds of thousands of dollars of tax revenue will stay in local budgets. We anticipate a more earnest debate next session about how to disburse the still-growing Payment in Lieu of Taxes (PILOT) Special Fund surplus, which is likely to continue to accrue even with the 5% shift in the LOT formula.
- Municipal grand list stabilization for flood sales. While this section was eliminated from H.397, it did pass as a one-time appropriation in Section B1100 of the “Big Bill” H.493 and is a critical flood recovery provision. The new program allows the Vermont Department of Taxes to reimburse municipalities for local property taxes assessed for flood-prone properties acquired by a municipality under the voluntary buyout program operated by the Division of Emergency Management. The Grand List Stabilization Program is funded from a $1 million transfer of PILOT surplus funds.
- 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 municipalities’ financial resiliency in the case of unexpected negative economic trends. Many municipalities had this authority by charter; now all municipalities may create such a fund balance to manage unexpended revenues in future years’ budgets.
- Authority to 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 for FEMA reimbursements to come before rebuilding vital town infrastructure or restoring municipal services. State law now allows municipalities to take on debt for up to five years without a town vote in the case of an all-hazards event.
- Authority to choose level debt service. Prior to this change, statute required municipal loans to be level principal, meaning that debt payments start high and decrease yearly as the cost of interest goes down. Now municipalities can choose to structure level debt by amortizing the debt to allow for consistent annual repayment of amounts for the life of the debt service. This will help stabilize local property tax bills and is more within the national norms of government borrowing.
Other Miscellaneous Provisions
- Incorporation of federal regulations. The law makes clear that all federal regulations currently incorporated into state law, such as certain non-profit exempt statuses, will stay in effect until January 2029 regardless of whether the federal rule was repealed or amended.
- Return of TIF overpayments. The City of Barre and Town of Milton received the return of overpayments to the State Education Fund related to their respective TIF districts.
- TIF extension for Barre: The City of Barre may incur debts within their TIF until 2028 (a two-year extension).
Act 57 Effective Dates
This Act is effective on July 1, 2025, except that Section 11 (local option taxes) is effective on October 1, 2025, and Section 20 (incorporation of federal regulations) took effect on passage, June 11, 2025.
As public boards across the state began operating under 2024’s new hybrid Open Meeting Law requirements, VLCT’s Municipal Assistance Center (MAC) heard a number of questions and complaints. Our advocacy team and MAC worked together last fall to bring forward a long list of proposed technical changes to statute that would make it easier for municipalities to comply. Each Government Operations Committee worked throughout the session on bill S.59 to clarify requirements for municipal public bodies and make other changes in response to the modern needs of 21st century local government.
- Undue hardship. The law clarifies that the undue hardship exemption applies to the “unit of government”, not to the public body. To exempt a public body, a municipality must show that the entity lacks the staff or other necessary resources associated with compliance.
- Hybrid requirement. The law clarifies that the hybrid meeting requirement only applies to public bodies of the state government. State advisory bodies and municipal public bodies are exempt, and there is a new exemption for state public bodies conducting site visits or inspections.
- No more “non-advisory”. Act 51 eliminates the use of the term “non-advisory” in the Open Meeting Law and only uses the terms “public body” and “advisory body”. A “public body” means a body that has supervision, control, or jurisdiction over legislative, quasi-judicial, tax, or budgetary matters. An “advisory body” does not have supervision over those matters.
- Site visit exemptions. Municipal public bodies are exempt from the hybrid meeting requirement generally and now do not need to record site visits or inspections. Site visits are, however, still a public meeting and so are subject to requests for special accommodation.
- Recording meetings. A public body of a municipality, except advisory bodies, shall record or cause to record, in audio or video form, any meeting of the public body and post a copy of the recording in a designated electronic location for a minimum of 30 days following the posting of the minutes for a meeting. This means that a municipality can rely on local access networks or other third-party partners to record meetings. This also clears up a lot of confusion around when to post the recordings and for how long – making the posting of recordings consistent with the posting of minutes.
- Noticing meetings. Municipalities may now post official meeting notices at a designated location within a neighboring municipality.
- Executive sessions. The law clarifies that a public body must warn an anticipated executive session on its agenda as “proposed executive session” and indicate the nature of the business of the executive session. The body must also vote by a two-thirds majority of members present to both enter and to conclude the executive session; the vote to enter session shall be held in open meeting and recorded in the minutes. Per VLCT’s request, cyber security was added as allowable business for executive session.
- Disorderly conduct. Currently, disorderly conduct applies to a person who “disturbs any lawful assembly or meeting of persons”. Act 51 adds conduct that substantially impairs the effective operation of an assembly or meeting, specifying conduct that: (A) causes an assembly or meeting to terminate prematurely; or (B) consists of numerous and sustained efforts to disrupt an assembly or meeting after being asked to desist.
Act 51 Effective Dates
Act 51 is effective on passage, June 9, 2025.
Throughout the session, lawmakers heard robust testimony from landowners, municipal officials, and stormwater experts regarding complications with the state’s implementation of the 3 Acre Rule. Act 37 takes some primary steps toward potential permit reform and creates new funding available to municipalities that assume full legal responsibility for a stormwater system required under the rule.
VLCT feels that more work needs to be done 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
- Only require treatment at the time of redevelopment
However, Act 37 does advance some important changes that may help some municipalities address local 3 Acre sites. The law specifies:
- Notice. The Secretary of the Agency of Natural Resources shall provide notice to all owners of property subject to the 3 Acre permit.
- Municipal assessment of stormwater fees. When a municipality assumes full legal responsibility for a stormwater system, it may assess municipal special assessment fees on users of the stormwater system, provided that a majority of the property owners consented and that the fee assessed is “a fair apportionment to the user of the cost of the improvement in accordance with the benefits the user received”. Full legal responsibility means legal control of the stormwater system, including a legal right to access the system and a duty to maintain, repair, and replace the system.
- Deadline. The deadline for permits to be issued under the rule is changed from 2033 to October 1, 2038, or not later than five years after a binding stormwater-specific waste-load allocation has been established for that watershed, whichever occurs first.
- Surcharge. The sunset of the property transfer tax clean water surcharge is repealed.
- Stormwater management public resource guide. On or before January 1, 2027, the Secretary of Natural Resources shall publish a Public Resource Guide to Stormwater Management that provides people who are subject to stormwater operating permits with information and resources related to complying with and paying for stormwater permitting requirements.
- Study committee on stormwater management and creation of regional stormwater utility districts. The committee is created 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. Municipal representatives to be included are a representative of VLCT, a representative of a community that’s subject to the Municipal Separate Sewer System permit, a representative of a town with a population under 2,500, and a representative of the Green Mountain Water Environment Association. The statutorily directed scope of the study committee is vast, and the report to the legislature is due on or before January 15, 2027.
- Funding.
- Expands eligibility for the Developed Lands Implementation Program to allow funding for projects to acquire a 3 Acre permit and for the renewal of permits for a discharge to stormwater-impaired water that was permitted under an individual permit or a general permit that did not incorporate the requirements of the 2002 Stormwater Management Manual or any subsequently adopted Stormwater Management Manual.
- Expands eligibility for the Municipal Stormwater Implementation program to make funds available to compliance with 3 Acre for a residential subdivision when the municipality assumes full legal responsibility for the system. In FY27, $5 million will be appropriated, and in future years the Clean Water Fund Board shall prioritize this program and make at least $1 million available annually (beginning in 2032). Permits for sites that include housing used for primary residences shall receive additional priority points for funding.
- $2.5 million to the Vermont Housing and Conservation Trust Fund.
Act 37 Effective Dates
All sections of this Act are effective July 1, 2025, except Section 10, which changes the priorities of the Clean Water Fund, is effective October 1, 2032.
Vermont cities and towns currently have authority to maintain more than 547 miles of legal trails statewide – an average of two miles per town. Legal trails are public rights of way that provide critical access to state, municipal, and federal public lands throughout Vermont. Many legal trails connect to larger multi-use trail networks that are the backbone of our rural outdoor recreation economy. Vermonters and visitors alike use legal trails for hunting, fishing, hiking, back country skiing, mountain biking, and more.
VLCT’s work to protect municipal authority to regulate both the use and maintenance of municipal legal trails in the 2025 session was a wild roller coaster ride. Ultimately, the transportation conference committee working on the year’s miscellaneous DMV bill, which became Act 66 on June 12, 2025, agreed to statutory language clarifying that the existing legislative intent is to allow this authority (effective immediately), while making technical changes that add into the appropriate subdivisions of the law the explicit authority for municipalities to maintain legal trails, effective April 1, 2026.
Legislative Intent Regarding Legal Trails (Section 44)
- Outdoor recreation is a significant part of Vermont’s identity and economy.
- Trails provide Vermonters and visitors with access to natural beauty throughout the state and are used for a wide variety of outdoor recreational activities throughout the year.
- Some trails are also used by Vermonters for travel or to access their homes and properties.
- The State and local governments use some trails to provide maintenance to state and municipal lands and facilities, as well as to provide public safety and rescue services.
- Trails may require regular maintenance to ensure that they remain passable and can continue to support recreation, travel, access, and various public services.
- While many trails in Vermont have been established through private easements or other agreements, a subset of trails, known as legal trails, lie along public rights-of-way that were once town highways and are governed by the provisions of 19 V.S.A. chapter 3.
- It is the intent of the General Assembly to clarify municipalities’ authority to exclusively or cooperatively maintain legal trails under the provisions of 19 V.S.A. chapter 3.
Other Changes That Affect Municipal Government
- EV infrastructure fee. The fee shall not be charged to any municipality owned vehicle, or any vehicle owned by a volunteer fire department, ambulance service or other organization conducting rescue or any vehicles used solely for firefighting, emergency medical, or rescue purposes.
- Commercial motor vehicle instructors. The law enhances requirements for commercial motor vehicle instructors including that they must hold a CDL of the same or higher class for the vehicle used in the instruction and have at least two years' experience operating the vehicle requiring the same or higher class CDL and any applicable endorsements.
- Registration fees. Minor changes were made to the vehicle weights for the purpose of assessing fees for tractors, truck-tractors, and motor trucks.
- Riding on roadways and bicycle paths. Cyclists must obey all traffic control and traffic control signs including bicycle control signals and may follow walk signals.
Act 66 Effective Dates
- Early renewal of operator’s licenses, operator’s privilege cards, and nondriver identification (Sections 16 and 17) took effect on passage, June 12, 2025.
- Maintenance of legal trails (Sec. 45) takes effect on April 1, 2026.
- Reduced license fees for individuals receiving SSI or SSDI benefits (Section 9) and operation of bicycles (Section 41) take effect on July 1, 2026.
- All other sections, including EV infrastructure fees (Section 6), truck registration fees (Section 34), and the finding of legislative intent regarding legal trails (Section 44), take effect on July 1, 2025.
VLCT entered the session with a long list of technical change requests related to municipal elections and appointments that had been collected and proposed by the VLCT Municipal Assistance Center. Those changes were universally supported by the House in the Committee on Government Operation’s sponsored bill H.474.
However, some political gamesmanship in the Senate kept that bill on the wall until veto session – where all of the municipal provisions were struck before the Senate finally passed a slimmed-down version of the bill. The final elections package was limited to only the necessary state elections law changes that the Vermont Secretary of State’s office said must be taken up before an election year. VLCT plans to pick up where we left off and seek a municipal elections bill next session.
Changes Made in this Year’s Elections Package
- "One-Bite" candidacy. H.474 includes what is commonly called a “sore loser” provision or “one-bite candidacy”. The new law states that in no event shall a candidate who loses a major party primary be nominated to appear on the general election ballot by a committee of any party other than the party for which the candidate appeared on the primary ballot and cannot appear on the general election ballot as an Independent candidate. This means that, for example, if a candidate loses the Democratic primary, they could not be nominated by the Republican or Progressive Party Committee to run on the general election ballot for the same office. If the Democratic nominee withdrew, the Democratic Party Committee could nominate a losing primary candidate for the general election ballot.
- Delivery of absentee ballots. Changes to this section clarify the definition of “overseas voters” and will now allow town clerks to mail or electronically deliver early voter ballots when requested to voters in the Secretary of State’s address confidentiality service for survivors of crime, known as “Safe at Home”.
- Write-in candidates. The law now requires that a write-in candidate must submit a form to either the Secretary of State or all town clerks within the applicable district by 5:00 PM on the Thursday before the election. This requirement is exempted if the candidate has already filed consent to be listed as a major party candidate, if no candidate is printed on the ballot, or if the candidate whose name is printed has died or otherwise been disqualified prior to 7:00 PM on election day. Before becoming a party candidate in the general election, a write-in candidate must now also complete all candidate consent forms as otherwise required for primary election candidates.
- Counting write-in votes. For candidates who meet the above requirements, votes shall be tallied individually. For all other write-in votes, votes shall be tallied in aggregate and recorded as “other write-ins", unless, if all votes tallied as “other write-ins” exceeds the total number of votes cast for any candidate who appears to have been nominated or elected, then election officials shall record the name and vote totals on the tally sheet for all candidates.
If this result occurs in a multiple-municipality district, but one or more municipalities did not record the name and vote totals for all candidates, the Secretary of State, on the day after the election, shall order the town clerk to reconvene the board of civil authority. In the presence of at least two other election officials who are not members of the same political party, the clerk shall open the ballot containers, list all write-ins for this nomination or office individually, and record write-in votes for all candidates. The clerk shall then place the entire contents in containers, affix new seals, and transmit the new seal numbers.
- Expenditure reporting. Now, each candidate who makes an expenditure shall file with the Secretary of State at the time of making the first expenditure (no longer 10 days or $500 threshold).
- Independent expenditure only political committees (IE PAC). All existing requirements that have applied to Coordinated PACs and Political Committees (Parties) now apply to IE PACs, and the filing requirements for both are now set at $500 of expenditures, or any amount for contributions, and apply to the influence of elections (as well as public questions). The definition for IE PAC now includes self-funded individuals.
- Audits of voter checklists. There will be a universal audit of all state Representative and Senatorial districts. Local boards of civil authority shall complete the audit on or before September 15, 2025; each town clerk shall provide a summary to the Elections division of the Secretary of State’s Office on or before October 1, 2025; the Secretary of State shall submit a written report to the legislature on or before November 15, 2025. The Elections Division shall notify and provide support and training to each town clerk and board of civil authority for the purpose of this audit.
- Notification of nonconforming petition. The officer shall now provide written notice within two business days (not 72 hours).
- Nominations of Justice of the Peace. Party members may caucus on or before the third Monday in July before each primary election, and notifications of nomination shall be filed by 5:00 PM on the fourth Monday in July.
- Early voting. General elections processes of the town clerk shall begin 45 days before the opening of polls for voter status, processing absentee ballots, and ballot curing as prescribed in Sec. 27. 17 V.S.A. § 2546.
- Open Meeting Law is amended so that “meeting” does not mean a gathering of the voters of a municipality for the purpose of conducting annual or special meetings.
H.474 Effective Date
This act shall be effective upon passage.
What started as three separate bills – for education reform, the regionalization of property reappraisal, and changes to state property classification – all became one big bill in H.454. This 154-page bill could go down as the most infamous ever passed by the Vermont legislature. It has certainly been the most controversial of the 2025 session.
Summary of the Bill
Enactment of the education transformation package will change nearly everything about the funding and oversight of Vermont’s public education system. It creates an 11-person panel to draft new district maps, each with between 4,000 and 8,000 students. Vermont currently has 119 districts, all with fewer than 4,000 students. H.454 also creates minimum school sizes and would allow the Agency of Education (AOE) to recommend closure if a school doesn’t meet minimum standards for three years in a row. The law also eliminates local control over school budgets, replacing the current system with a foundation formula, where the to-be-determined school districts would receive a per-pupil spending amount based on a formula that weights certain factors. It also introduces a new statewide property class for second homes called “non-homestead residential”. Primary residences would continue to be taxed at the homestead rate, commercial properties and other non-residential building types such as camps would continue to be taxed at the non-homestead rate, and a third tax rate would be set for non-homestead residential properties. The bill also commissions a slew of new legislative studies and reports and takes next steps toward a regionalized reappraisal system.
H.454 changes the levers available to state government for both revenue setting through property tax rates and for education fund expenditure – which has swollen to $2.4 billion in the FY26 budget. The intent of the legislature and the governor is to, over the next three to eight years, lower and stabilize property taxes for Vermonters.
However, as we said back in December, the devil is in the details, and most of the details have yet to –be determined by upcoming working groups, further study, and necessary future legislative action. These details include setting the per-pupil funding amount, establishing district boundaries, forming district oversight structures (no more local school boards), and even setting election and appointment schemes for district officials. Lawmakers are saying that in the future, low spending districts may pay more, high spending districts should pay less, and in the long- run, Vermont should pay less for better outcomes in public education.
This rewrite of the state’s property tax scheme will certainly come at some great cost, not only in dollars for the hiring of all the necessary technical support, study, and school construction necessary to execute such a sweeping transformation, but also for local control. The bill appropriates the sum of $2.865 million in the FY26 budget to accomplish the various studies, reports, and task forces as directed and for new positions within the AOE to support education transformation. Many school board members, superintendents, and certainly the Vermont-National Education Association (VT-NEA) are opposing the plan – which is certain to receive mixed reviews from lawmakers themselves as they head home to explain the impact of these changes on their local districts.
Here is Vermont’s education and property tax transformation plan as passed in H.454 (for now?):
New Statewide Education Standards
- Average class size standards. The law creates new minimum standards ranging from 10 students for first grade to 18 students for all grades nine to 12. Multiage classrooms are limited to two grades per classroom, and small group exemptions are made for special education or intervention, drivers' education, technical education, and more.
- School closure. If a school is deemed to have failed to meet minimum standards for three consecutive years, the Secretary may recommend closure to the State Board of Education.
- School closure stop gap. The State Board is prohibited from ordering school consolidation if it would result in school construction costs in excess of the applicable district’s capital reserve account until the General Assembly establishes new school district boundaries.
- Rulemaking. The State Board is directed to make or amend rules for class size minimums, approved independent schools, and graduation requirements and shall report to the legislature by December 1, 2025.
- Tuition. Tuitioning may continue to Vermont public schools, and to independent schools that are approved, meet the above standards, or are located within a non-operating district or district that does not operate all grades as of July 1, 2024, or where at least 25% of the school population is district funded. Students currently enrolled in otherwise ineligible schools are able to continue through graduation. Tuition amounts will be set to the to-be-determined foundation formula amount.
Funding
The law creates a new foundation formula where future districts will be paid statewide per-pupil multiplied by local weighting factors. These foundation formula payments are called “educational opportunity payments”.
- Small schools may receive additional grants.
- The law creates a transitionary period for fiscal years 2029–2032, where the educational opportunity payments will be calculated with a de-escalating adjustment factor to attempt to step down substantial budget swings, using the FY25 district spending to understand the future “transition gap”.
- District voters may approve up to 5% more spending over the base formula amount, called “supplemental district spending”.
Studies, Reports, Working Groups, and Task Forces
- The Commission on the Future of Public Education. The work of the commission is extended and it is tasked with reporting recommendations for what roles, functions, or decisions should be a function of local control and what roles, functions, or decisions should be a function of control at the state level as well as a process for a community to have “a voice in decisions regarding school closures”. The commission is to submit its report to the legislature by December 1, 2025.
- School District Redistricting Task Force. This task force will be five nonlegislative members who are former school district officials, and six legislators (three from each chamber). The task force shall study and consider different configurations for school district consolidation and propose not more than three options for new school district boundaries. At least one proposal shall consider the use of supervisory unions and supervisory districts and allow for the continuation of a tuitioning system that includes independent schools. Proposed districts or supervisory unions are to encompass 4,000–8,000 students. The task force shall hold at least two public hearings and submit their report by December 1, 2025.
- School District Voting Ward Working Group. This seven-member group will include the Secretary of State, serving as Chair, and three appointees of the Vermont Municipal Clerks and Treasurers Association. It is tasked with coordinating with the Redistricting Task Force to create voting district wards within the new school districts contemplated by this act, to ensure that school board membership is apportioned in such a manner as to achieve substantially equal weighting of the votes of all voters in the choice of school board members.
- Agency of Education (AOE) School Calendar and Graduation Requirements Report. On or before January 1, 2026, the AOE shall recommend to the State Board of Education standards for graduation and publish a new statewide school calendar that will be in effect for the 2028-2029 school year. Added to this section are enumerated requirements for the AOE to also report on or make recommendations for
- a statewide student data and financial system
- the agency’s oversight plan related to school construction
- clear guidance to local school boards to prepare for transition and consolidation within new districts
- how to address collective bargaining agreements
- the need for cooperative education services and the oversight of therapeutic schools.
- School Construction. Statutory authority over the program is transferred from the State Board of Education to the AOE. The law tasks the AOE with developing a more detailed School Construction Aid program that will include rules, guidance, oversight, policies, procedures, and capital planning for local officials. It also creates an eight-member Advisory Board that will include the State Treasurer and the Vermont Bond Bank. The Advisory Board is tasked with 12 areas of jurisdiction ranging from collecting a “clearinghouse of prototypical school plans” to determining eligible costs for reimbursement in the program. The Board shall convene by September 1, 2025, and meet at least six times annually.
- Special Education. On or before September 1, 2025, the AOE shall submit a written report to the House and Senate Committees on Education, the House Committee on Ways and Means, and the Senate Committee on Finance addressing the factors contributing to growth in extraordinary special education reimbursement costs. In consultation with the State Advisory Panel on Special Education, the AOE shall develop a three-year strategic plan for the delivery of special education services in Vermont.
- Property Tax Classification. The Commissioner of Taxes shall study the implementation of new property tax classifications under this act and identify any further actions required by the Department of Taxes, Vermont municipalities, and the General Assembly to successfully implement the new tax classification system on the timeline established by this act. The report will include a recommended tax multiplier to ensure that new revenue from the nonresidential homestead rate will offset the homestead property tax exemption.
Reappraisal Breakdown
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 following changes in H.454 related to reappraisal and tax sale are effective upon passage.
- Standards, Guidelines, and Procedures. The Director of Property Valuation shall issue guidelines and make rules for the contracting of third-party appraisers, standards for the collection of parcel data, IT and software systems, and standardized practices for a full reappraisal. The PVR director will also establish a schedule for each regional assessment district to fully reappraise every six years.
- Transition: New municipal reappraisals will not be ordered and municipalities should not enter into new contracts for reappraisal on or after January 1, 2027. Orders for a municipality that does not have a contract in place by January 1, 2030 shall not have the force of law.
- Stakeholder working group. On or before January 15, 2026, the Department of Taxes, in consultation with relevant stakeholders, shall submit recommendations advising on the implementation of regional assessment districts and on the development of guidelines, procedures, and rules needed to effectuate a regionalized reappraisal system. The recommendations will include an analysis of the advantages and disadvantages of having the State take full responsibility for regionalized appraisals and suggestions for legislative language that address: (1) the authority or authorities who will contract for and conduct reappraisals; (2) the authority or authorities who will hear and decide property valuation appeals; (3) amendments necessary to conform statute to the change from an April 1 to January 1 grand list assessment date.
- Tax Sale. When the taxpayer owes a minimum of $1,500.00 and is delinquent for a period longer than one year, the collector may extend a warrant on such land.
Property Class Breakdown
The listers and assessors shall annually update the grand list to include a tax classification not later than June 1 of every year, using information submitted to the Department of Taxes, identifying each parcel as one of the following:
- Homestead, meaning a parcel, or portion of a parcel, declared as a homestead on or before October 15 for the current year.
- Nonhomestead nonresidential, meaning a parcel, or portion of a parcel, that does not qualify as “homestead,” or “nonhomestead residential” under this section.
- Nonhomestead residential, meaning a parcel, or portion of a parcel, for which a homestead was not declared for the current year and that has a residential property, as defined by the Commissioner by rule.
A parcel with two or more portions qualifying for different tax classifications shall be classified proportionally based on the percentage of floor space used. Parcel owners may appeal classifications through a property valuation appeal process. For calendar year 2027, the Commissioner of Taxes shall amend and create forms so that taxpayers report information on the use of their property for such property to be classified, and the Commissioner shall determine classification under the new rules on or before October 1, 2027.
The annual T-bill for FY26 passed and was signed into law with bipartisan support and little fanfare – and without the major revenue adjustments needed to level fund town highway aid and other critical statutory transportation programs.
Throughout the session, VLCT advocated against the governor’s proposed cuts to Town Highways Structure (down 10.2% from FY25) and Class 2 Town Highway funding (down 2.9%). The Agency of Transportation is currently only able to fund about one quarter of town projects submitted.
There’s more bad news for Vermont commuters: funding for the state’s own paving program is down to $103 million, from $130 million in FY25 and $141 million in FY26. Transportation Secretary Joe Flynn reports that construction bids are up about 40% over recent years. This steep decline in annual funding combined with high inflation means that the Agency of Transportation will only be able to tackle 125 miles this construction season – a 45% year-over-year reduction.
Making matters worse, the downward trend in transportation funds means Vermont could be leaving more and more federal funding on the table in future years. The commonly understood rate of replacement for paved roads is about 10 years, and diminishing the mileage of road replaced each year only digs a deeper hole.
Act 43 does include new appropriations language that will, in future years, fix a minimum town highway funding appropriation at the prior year’s amount unless inflation has gone down.
A Short Rundown of What’s in the 44-page Transportation Bill:
- New Park & Ride funding. $2.4 million for projects in Manchester and Sharon.
- Bike and Pedestrian Program funding. $22 million, which will fund 33 bike and pedestrian projects and also design, scope, or study 27 more in Arlington, Bakersfield, Bennington, Bethel, Brattleboro, Bristol, Burke, Burlington, Castleton, Chester, Danville, Enosburg Falls, Fairfax, Greensboro, Hardwick, Hartford, Highgate, Hinesburg, Huntington, Hyde Park, Irasburg, Jericho, Lyndonville, Middlebury, Montpelier, Moretown, Newfane, Newport City, Northfield, Pawlet, Randolph, Royalton, Rutland City, Rutland Town, Sheffield, Shelburne, Sheldon, South Burlington, Springfield, St. Albans City, St. Albans Town, Swanton, Wallingford, Waterbury, West Rutland, Williston, Wilmington, and Windsor.
- Transportation Alternatives Program funding. $6.5 million for 17 transportation alternatives construction projects; 26 transportation alternatives design, right-of-way, or design and right-of-way projects; and eight scoping studies. Projects are funded in Athens, Barre City, Bennington, Brandon, Brattleboro, Bridgewater, Bristol, Burke, Burlington, Castleton, Derby, Enosburg Falls, Fairfax, Fairlee, Ferrisburgh, Grafton, Guilford, Hartford, Hinesburg, Hyde Park, Jericho, Londonderry, Lyndon, Montgomery, Newark, Proctor, Rockingham, Rutland City, Shoreham, South Burlington, Springfield, St. Albans Town, Swanton, Tinmouth, Warren, Williston, and Wilmington.
- Public Transit Program funding. $53 million for public transit uses throughout the state and changes to Green Mountain Transit Authority’s service areas outside the urbanized area of Chittenden County.
- Rail Program funding. $62 million, including local funds and $32 million in federal funds, for intercity passenger rail service, including funding for the Ethan Allen Express and Vermonter Amtrak services, and rail infrastructure that supports freight rail.
Town Highway Aid Appropriations
Include a new requirement beginning with State fiscal year 2027 (FY27) that Town Highway Aid appropriations shall increase over the previous fiscal year’s appropriation by the same percentage change as Vtrans total appropriations funded by the Transportation Fund or shall remain at the previous fiscal year’s appropriation in the event appropriations decrease. This should prevent Town Highway Aid funding decreases like this year, but makes shoring up the Transportation Fund even more critical.
- Town Highway Bridges: $37.8 million
- Town Highway Structures: $7.2 million
- Town Highway Class 2 Roads: $8.6 million
- Town Highway Aid: $30.4 million
- Town Highway Class 1 Supplemental: $128,750
- Town Highway Vermont Local Roads: $481,452
- Municipal Mitigation Assistance: $6.9 million
- Town Highway Federal Disasters: $4 million
- Town Non-Federal Disasters: $1.15 million (appropriated from the PILOT Special Fund, not Transportation Fund)
Other Transportation Policy Changes
- Town Highway and Municipal Grants Study. Directs the Agency of Transportation, in consultation with the Vermont League of Cities and Towns and the Vermont Association of Planning and Development Agencies, to evaluate the state’s Town Highway Aid and municipal grant programs administered by the Agency and identify potential efficiencies and improvements related to administration.
- Directs Vtrans to design a mileage-based user fee for electric vehicles and summarize the impacts on the FY26 Transportation Program caused by changes in State Transportation Fund revenues and delays or reductions in federal funding.
- Authorizes the Secretary of Transportation to enter into an agreement with the Town of St. Albans to relinquish a segment of the state highway in the Town of St. Albans known as Vermont Route 36.
- Established new provisions for the use and maintenance of “Rail Trails” by Vtrans, sponsors, and municipalities.
After two failed attempts to find agreement on the annual budget adjustment for FY25, the FY26 Budget Bill was among the first major bills passed. It was signed into law by Governor Scott on May 21.
The FY26 budget fulfills all statutorily required reserve requirements; meets all pension obligations; stabilizes several special funds; and makes essential investments in public safety, human services, housing, and other major areas. In addition, all fiscal year 2025 budget adjustments were incorporated into H.493.
The FY26 budget is nearly $360 million more than the $8.7 billion FY25 budget and consists of $2.5 billion in general funds, $3.2 billion in federal funds, $2.4 billion in education funds, $360 million in transportation funds, and $691 million in other funds. Notably, the FY26 budget transfers $77.2 million from the General Fund to the Education Fund to buy down property tax rates and sets aside $4 million to support education transformation. Some highlights from the FY26 budget are listed below.
Housing and Infrastructure
- Fully funds the Vermont Housing and Conservation Board (VHCB) at statutory level of $36.9 million
- $5 million General Fund to VHCB for additional housing initiatives
- $2.8 million General Fund to VHCB for developmental disability housing initiatives
- $4 million to the Department of Housing and Community Development (DHCD) for the Vermont Housing Improvement Program (VHIP 2.0)
- $2 million to the DHCD for the Manufactured Home Improvement and Repair Program (MHIR)
- $16.1 million for the Vermont Housing Finance Agency (VHFA) Middle-Income Homeownership Development and First-Generation Homebuyer programs and the Rental Revolving Loan Fund
- Provides $29.7 million for the Housing Opportunity Grant Program (HOP) that assists homeless individuals and an additional $3.35 million to support new shelters opened in fiscal year 2025
- Maintains $446,253 to address youth homelessness
- Maintains $8.1 million base appropriation for General Assistance Emergency Housing
- $30.5 million General Fund to the Department of Children and Families (DCF) for General Assistance Emergency Housing
- $2 million General Fund to DCF’s Office of Economic Opportunity (DCF-OEO) for shelter bed expansion
- Sets aside $10 million to support Emergency Housing GA transition in H.91
- $235,000 General Fund to the Department of Disabilities, Aging and Independent Living (DAIL) for HomeShare
- Adds $1.6 million for the Land Access Opportunity Board
Municipalities
- $50,000 to DEC for Municipal Wastewater Connections Database
- Includes additional support for communities impacted by flooding events in 2023 and 2024
- Eliminates all MTAP funding, which had been proposed at $3M
- $7.5 million for the Vermont Bond Bank Infrastructure Sustainability Fund
- $12.2 million for payment in lieu of taxes (PILOT)
- $1 million for brownfield remediation and redevelopment
Education and Workforce
- Transfers $77.2 million to the Education Fund be used for property tax relief
- Sets aside $4 million to support education transformation
- $17.5 million for Universal School Meals
- $9.5 million for environmental contingency fund for polychlorinated biphenyl (PCB) testing and remediation in schools
- Provides a 3% increase to the University of Vermont (UVM), Vermont State Colleges (VSC), and the Vermont Student Assistance Corporation (VSAC)
- Adds $3.8 million to the Judiciary for Tech Fund revenue replacement and $200,000 for security services cost of living adjustment (COLA)
Public Safety and Justice
- Adds $650,000 to Sheriffs to restore vacancy savings, allowing existing transport deputy positions and one new transport deputy position to be filled
- Adds $650,000 to the State’s Attorneys to restore vacancy savings and adds one fiscal and IT staff
- Establishes two new positions at the Human Rights Commission
- $1.1 million to the Agency of Administration for the Truth and Reconciliation Commission
- $600,000 to the Department of Public Safety (DPS) for state match for a cybersecurity grant
- Adds funds to support a new canine trainer at the Criminal Justice Council
- Adds $450,000 for the Urban Search and Rescue Team
- $800,000 to DPS for mobile and portable radio equipment
Food Security and Agriculture
- $500,000 to Agency of Agriculture Food and Markets (AAFM) for a grant to Vermont Foodbank for the Vermonters Feeding Vermonters program
- $500,000 to Vermont Local Food for Schools and childcare grants
- $850,000 to DEC for the Concentrated Animal Feeding Operation database project
- $17.5 million for universal school meals
This year’s bill also establishes a process to manage moderate reductions to federal funds when the General Assembly is not in session and establishes a contingent appropriations list including resources to help mitigate any changes in available federal funds.
FY26 Budget Resources
Most years, several municipal charter approvals or changes are introduced by legislators representing the municipalities seeking charter approval or changes. Some are minor technical changes and others are substantial changes to municipal authority. This session, 12 bills were introduced for either approval of new municipal charters or changes to existing ones. Only four were approved by both the House and Senate and signed by Governor Scott. As with other bills not passed in the first year of the biennium, the legislature can take up and continue working on any unpassed charter bills in the next session.
Charter Changes that Were Passed This Session
- H.10 approves amendments to the charter of the City of Barre to eliminate references to the City of Barre School District, separate the office of City Clerk and Treasurer into the offices of the City Clerk and the City Treasurer, and to move the date of the City’s annual meeting to the second Tuesday in May. Effective Date: May 1, 2025
- H.17 approves the adoption of the charter of the Town of Morristown to authorize the Town Manager to exercise certain authority, including the authority to hire, appoint, discipline, and remove all Town employees, subject to the provisions of personnel rules approved by the Selectboard. Effective Date: May 5, 2025
- H.504 approves amendments to the charter of the City of Rutland including allowing the maximum penalty allowed under state law for violations of City Ordinance, changes to certain tax assessments, and changes to the composition of the Rutland Redevelopment Authority. Effective Date: June 5, 2025
- H.505 approves amendments to the charter of the Town of Barre including repeal of the election of auditors by Australian ballot. Effective Date: June 2, 2025
In July, we will issue a follow-up to this annual Legislative Wrap-Up which will cover summer reports and study committees that VLCT will be engaging, as well as some emerging issues and unfinished business from the 2025 that we expect to gain focus and momentum in the second half of this biennium.