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VLCT urges municipal finance changes and targeted investments to help small towns recover from repeated floods
Summary
The Vermont League of Cities and Towns asked the committee to adopt three statutory municipal finance changes—permission to hold unassigned fund balances, extended emergency borrowing terms, and optional level debt service structures—and urged continued state support for buyouts and municipal relocation of threatened public facilities.
Samantha Sheehan, municipal policy and advocacy specialist for the Vermont League of Cities and Towns (VLCT), told the committee VLCT supports legislative work on flood resiliency and urged three specific statutory changes so small, low-resource towns can better respond to repeated flood emergencies.
Sheehan said VLCT staff had reviewed both H 397 (the sponsor's bill described earlier) and H 232 and emphasized two recurring themes: small municipalities lack capacity to meet competitive grant and local match requirements, and repeated events concentrate catastrophic costs in a small number of towns. She provided the committee with anonymized FEMA-derived figures showing that in 2024 "one third of [the municipal entities impacted] made up for 91% of the cost of damages" and that two-thirds of the towns hit in 2024 were also impacted in July 2023. She said many of the hardest-hit places have populations under 2,000.
VLCT's three requested statutory changes
- Allow municipalities to retain an unassigned fund balance: Sheehan said an unassigned fund balance lets towns stabilize tax rates and be "grant ready"; some chartered towns already have that authority but half of Vermont municipalities do not.
- Extend emergency borrowing payback authority from one year to five years: State law currently limits emergency municipal borrowing to payback within one year, VLCT said; given the lengthy FEMA reimbursement process, towns need longer terms so they can borrow, complete repairs and repay when federal reimbursements arrive.
- Allow optional level debt service: VLCT asked that municipalities be given the option to structure debt with level annual debt service (principal + interest) rather than the current level‑principal requirement, providing more predictability for taxpayers and better cash‑flow matching during multi‑year recovery.
Sheehan also reiterated VLCT support for continued buyout funding and suggested the bill consider municipal relocation support for threatened public buildings and shelter sites. She asked the committee to consider where language should be specific to flood events versus all‑hazard emergencies, noting that some preparedness investments have broader applicability.
Sheehan said the requested changes were drafted with assistance from Vermont Bond Bank attorneys and that they are Title 24 (municipal finance) technical fixes that do not change state revenue. Committee members acknowledged the requests and said the committee would follow up with VLCT and Bond Bank staff to refine statutory language.
