Lawmakers, Local Officials Debate Return of LOT Pilot Surplus and Funding for Flood Buyouts

Members of the House Committee on Ways & Means heard Tuesday that a growing surplus in the pilot special fund — fed by local option tax (LOT) receipts and rising consumption tax revenue — has prompted calls from municipal officials to return excess dollars to the towns that generated them.

Samantha Sheehan, an advocacy team member with the Vermont League of Cities and Towns, told the committee the league “strongly supports H.164,” a bill described in testimony as seeking to modernize the LOT formula and return the pilot surplus to municipalities. She said the league’s members want an equitable return to the towns that helped create the surplus and object to proposals that would appropriate the money to programs for which many contributing towns would not be eligible.

“The surplus in the pilot special fund has been contributed to by two primary factors,” Sheehan said: more communities adopting local option taxes, and a sharp rise in consumption tax receipts since 2019. She told the committee the current surplus is approximately $10.3 million, compared with roughly $3.3 million…