WLR April 14: Looking for LOT Refunds, MTAP Funding Cut, More 3-Acre Debate

It has been months since the Joint Fiscal Office released a brief on the current state of the Payment In Lieu Of Taxes (PILOT) Special Fund, and so far, there has been no action to appropriate a return of the $10.3 million-dollar (and growing) surplus to the towns that generated those revenues through local option taxes (LOT). 

We thought that, on the heels of a brutal tax year and a bruising election cycle in 2024, lawmakers would jump at this opportunity to send money back to their home districts without having to tap state coffers. Instead, they have quietly expressed a desire to hold back the surplus for a future appropriations debate. 

Last week, the VLCT advocacy team again testified that these monies should be returned, this time to the Senate committees on Finance and Government Operations.  

The PILOT Special Fund revenues are local revenues, created by a process of local control. In consultation with the current 34 LOT towns, VLCT advocates that the majority of current surplus monies should be returned to the communities that generated the revenues.   

According to the Joint Fiscal Office, the surplus is driven by a growing list of municipalities choosing to add LOT and quickly growing consumption tax receipts, which are up about 44% since the pandemic. At the end of FY24, the fund carried a $10.3M surplus and is likely to generate a nearly $4M surplus in the current fiscal year, which ends in June. On Town Meeting Day 2025, four towns (Ludlow, Marlboro, Montgomery, and Montpelier) all approved new LOTS which are projected to add over $500,000 to the PILOT Special Fund annually, beginning in July.  

VLCT agrees that in future years a healthy surplus in the fund should be maintained in order to prorate PILOT payments at 100% to the communities that host tax-free state-owned land and buildings. However, over the last two years an extreme surplus of these local revenues has been piling up. Presently, all 34 LOT communities established this taxing authority through a charter process and most have obligated these revenues to support a range of local initiatives including economic development, facilities, town highways, and to buy down property taxes.  

VLCT will keep working for a substantial return of the surplus money to the towns that have contributed, but with the annual appropriations bill on its way out the door our window of opportunity may be closing soon. Please continue to let your Senators know that your municipality expects its over payment of LOT to the PILOT Special Fund to be returned. 

When the annual appropriations bill, nicknamed the “Big Bill”, passed the House in late March, all funding for the Municipal Technical Assistance Program (MTAP) had been eliminated. The Big Bill is now in its final stages of mark-up in the Senate Appropriations committee, and so far, MTAP funding has not been restored.  

Over the last week, the VLCT advocacy team joined other technical assistance providers including the Vermont Council on Rural Development, the Preservation Trust of Vermont, the Vermont Housing and Conservation Board, and leaders from some Regional Planning Commissions and got to work making sure that Senators understand the incredible impact MTAP has had for Vermont communities since the program was created in 2023.  

MTAP is intended to assist communities that have a high need for state and federal grants but very low capacity for accessing and applying for those sources.   

Towns that are automatically eligible for MTAP assistance are above the 50th percentile in the Vermont Community Index (VCI) and select communities that were determined to be significantly impacted by the July 2023 floods such as Barre City, Middlesex, and Johnson. See a list of pre-approved towns by county here.   

Through MTAP, technical assistance partners have leveraged a relatively small state investment to help municipalities capture millions more in state, federal, and philanthropic grants to complete complex funding stacks. MTAP technical assistance partners assist municipalities with project readiness, grant research and application, reporting requirements and compliance, and project management.  

VLCT has identified at least $15 million in additional funding captured through MTAP assisted projects, with other grant applications submitted and pending award. Examples of successful MTAP projects that have helped bring new investment to Vermont communities include:   

The innovative and collaborative approach of MTAP allows state agencies, local governments, non-profits, and community groups to work together to equitably deploy precious state funds, capture federal investment, and advance shared priorities in Vermont’s most rural and underserved communities.   

With an increasingly volatile federal funding environment, this additional capacity provided to small towns is more critical than ever to assist them not only in accessing essential dollars to fund local initiatives but to remain compliant so they can keep them.  

Join VLCT’s advocacy work by asking your Senators to include a $3 million appropriation to MTAP in the state’s FY26 budget.

The Senate Committee on Natural Resources and Energy has continued its discussions on H.481, an act relating to stormwater management, related to 3-Acre stormwater management permitting.  

Last Thursday, the VLCT advocacy team provided testimony that articulated the complexity of 3-Acre regulations, which in large part apply to already developed, privately owned parcels. We provided information about the types of treatments required and updated cost projections, which are up to $70,000 - $112,000 per acre.  

Total costs for all 677 sites (6,500 acres) is in the ballpark of $700 million. Other than the construction of new water treatment plants, remediation of 3-Acre sites is the most expensive clean water program in terms of dollar per estimated kilogram of total phosphorus load reduced.  

The fact is that only 177 of 677 sites have received permits between 2019 and 2025, and serious concerns related to equity, the cost of treatment, and feasibility for developed areas persist. VLCT laid out our request for 3-Acre Permit Reform: 

VLCT testimony was followed the next day by members Jay Furr, Richmond Selectboard Chair; Chris Violette, Barre Town Manager; and a slate of affected homeowners. Their compelling testimony illustrated their inability to implement 3-Acre Permit requirements and the financial hardships associated with 3-Acre permitting. We expect H.481 to receive bill mark-up this week and hope to see some commonsense changes.