Committee discusses amendment to H.397 to align four municipal charters with 75/25 local-option tax split

Members of the Government Operations & Military Affairs committee discussed an amendment to H.397 that would supersede portions of four municipal charters so Burlington, Montpelier, Middlebury and Williston can take a proposed 75/25 split of local-option tax revenue.

The change, presented as a technical amendment, would remove explicit 70/30 allocations in each charter and instead cross-reference the state statute that governs local-option tax revenue shares, 24 V.S.A. §138. "All this amendment does is supersede those charters to allow them to take advantage of the 75 25 split," Representative Teddy Wazersack said.

The amendment matters because the local-option tax revenues feed a pilot special fund used for programs such as a municipal grand list stabilization and a voluntary buyout program that reimburses towns for lost taxable value when properties are converted to open space. Legislative counsel Tucker Anderson told the committee that the local-option tax revenue is the source of the pilot fund and that the program reimburses municipalities for up to 10 years for the loss in grand-list value. "The pilot fund is entirely funded by local option tax revenue," Anderson said.

Anderson and Wazersack described the amendment as technical drafting intended to align charters with the statutory change that was approved on second reading the previous day. Anderson said one town, Montgomery, already included a floor in its charter — language stating the local-option tax share would not be lower than 70% — and was therefore not included in the amendment. "They predicted into the future that the local option tax revenue share would shift, and they said it's not gonna go below 70 for our town," Anderson said.

Committee members asked whether municipalities must hold local votes to accept the new 75/25 split. Anderson said they would not: the change would be effected by state law. "Nope. This is state law. You can amend it as you see fit," Anderson said, adding that any future change in the statute (for example, a reduction to 60/40) would require another act of the General Assembly.

Some members pressed for more outreach to the affected towns so local officials could "digest" the change and consider whether they want a minimum floor codified in their charters. One member asked whether the committee could insert language to preserve a minimum of 70% unless municipalities vote to change it; Anderson said that approach would require more technical drafting and could be done by amending each charter's cross-reference to read "but not less than 70%." Representative Teddy Wazersack and counsel emphasized the committee could return with further drafting if members preferred a statutory floor.

No formal vote on the Kornheiser instance of amendment was recorded during the discussion; legislators said they planned to hear all instances of amendment before taking them up later in the session.

Further committee consideration was scheduled later in the meeting.