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Introduced by Senator Condos of Chittenden District

Referred to Committee on


Subject:  Taxation; local option tax revenue; authority for all towns; allocation of revenue for town highway fund

Statement of purpose:  This bill proposes to extend local option authority to all towns and to allocate a portion of local option tax revenues to a town highway fund.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  24 V.S.A. § 138(a) and (d) are amended to read:

(a)  Local option taxes are authorized under this section for the purpose of affording municipalities an alternative method of raising municipal revenues to facilitate the transition and reduce the dislocations in those municipalities that may be caused by reforms to the method of financing public education under the Equal Educational Opportunity Act of 1997.  Accordingly:

(1)  the local option taxes authorized under this section may be imposed by a municipality only during calendar years 1999 through 2008;

(2)  a municipality opting to impose a local option tax may do so prior to July 1, 1998 to be effective beginning January 1, 1999, and anytime after December 1, 1998 a.  A local option tax adopted under this section shall be effective beginning on the next tax quarter following 30 days’ notice to the department of taxes of the imposition; and all authority to opt to impose a local option tax under this section shall terminate September 1, 2007, and all authority to impose a local option tax shall terminate on December 31, 2008; and

(3)  a local option tax may only be adopted by a municipality in which:

(A ) the education property tax rate in 1997 was less than $1.10 per $100.00 of equalized education property value; or

(B)  the equalized grand list value of personal property, business machinery, inventory, and equipment is at least ten percent of the equalized education grand list as reported in the 1998 Annual Report of the Division of Property Valuation and Review; or

(C)  the combined education tax rate of the municipality will increase by 20 percent or more in fiscal year 1999 or in fiscal year 2000 over the rate of the combined education property tax in the previous fiscal year.

(d)  Of the taxes Taxes collected under this section, shall be paid as follows:

(1)  70 percent of the taxes shall be paid on a quarterly basis to the municipality in which they were collected, after reduction for the costs of administration and collection under subsection (c) of this section.  Revenues received by a municipality may be expended for municipal services only, and not for education expenditures.  Any remaining revenue shall be deposited into the PILOT special fund established by 32 V.S.A. § 3709.

(2)  The first $2.5 million of any remaining revenue shall be deposited into the PILOT special fund established by 32 V.S.A. § 3709.

(3)  Any then‑remaining revenue shall be deposited 50 percent into the PILOT special fund established by 32 V.S.A. § 3709; and 50 percent shall go to the agency of transportation for state aid to town highways, which amount shall be in addition to the appropriations required by 19 V.S.A. § 306, and which shall be distributed to towns in accordance with 19 V.S.A. § 306(a).


This act shall take effect upon passage, except the amendments to 24 V.S.A. § 138(d) shall apply to local option revenue payments beginning with the first quarterly payment in calendar year 2008.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont