MONTPELIER, VT – The Vermont Legislature is taking action to help individuals and towns impacted by July flooding. Bills in both the House and Senate will authorize the Commissioner of Taxes to reimburse municipalities for property tax abatements granted due to disruption to tax collections resulting from this summer’s flooding in Vermont’s federally-declared disaster areas.
“Vermonters and municipalities are still recovering from the impacts of the devastating July floods,” said Senator Ann Cummings, Chair of Senate Committee on Finance and lead sponsor of the Senate bill. “I’m pleased to introduce a bill that will provide Vermont homeowners and our towns with the State support they need as abatement requests are considered.”
“House members across the state have responded to their communities needs in the aftermath of this summer’s flooding,” said Representative Emilie Kornheiser, Chair of House Committee on Ways and Means and lead sponsor of the House bill. “Recovery will take each of us and I'm glad to be taking this step forward with tax abatement for our communities.”
Under current law, town boards of abatements may abate local and State property taxes, but still owe the State education tax for the abated properties. These bills provide a process to reimburse towns for those State property taxes owed.
Abatements and properties must meet the following eligibility criteria before the State will reimburse the town:
- Abatements must have occurred before April 15, 2024. A board of abatement may reconsider any abatement decision already made between April 1, 2023 and the date of passage of bill.
- Abatement of State education taxes must be in proportion to town taxes.
- The abated property must have been lost or destroyed due directly or indirectly to severe storms and flooding in an area that was declared a federal disaster between July 1, 2023 and October 15, 2023; and
- The loss or destruction resulted in one or more of the following:
- A 50% or greater loss in value to the primary structure on the property; or
- The property owner lost use of the primary structure on the property for 60 days or more; or
- The property owner lost access to utilities for the primary structure on the property for 60 days or more; or
- Condemnation of the primary structure on the property under federal, State, or municipal law, as applicable.
Municipalities may be reimbursed up to 8% for reasonable interest expenses, if two conditions are met:
- Borrowing was due to disruption to tax collections from flooding in a federally declared; and
- Unanticipated interest expenses were incurred on funds borrowed to make State education property tax payments.
Towns apply to the Vermont Department of Taxes, which will determine if the properties and abatements meet the criteria to be eligible for reimbursement. The Agency of Education will either reimburse the town for State property tax payments that have already been made or credit the town against future payments. When a homestead property owner files for a property tax credit in 2024 and 2025, any flooding- related FEMA payments received in 2023 and 2024 will not be counted as household income.
The legislation will require legislative approval once the legislature reconvenes in January. The legislature plans to act quickly on the legislation after reconvening in January.
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