House Bill No. 5407 establishes a reimbursement process for municipalities to recover lost property tax revenue due to exemptions granted to veterans with a 100% permanent and total disability rating. Under the bill, each municipality's assessor is required to certify the amount of tax revenue lost to the Secretary of the Office of Policy and Management (OPM) by July 1 each year. The OPM secretary will review these claims and certify the amounts due to each municipality by December 15, with payments made by the Treasurer before December 31. Municipalities that fail to submit the required documentation will incur a $250 penalty, although the OPM secretary has the discretion to waive this penalty under certain circumstances.

The bill also clarifies the definition of "municipality" to include towns, cities, boroughs, and consolidated towns and cities or boroughs. It is set to take effect on January 1, 2027, and is expected to result in a cost of at least $20 million to the General Fund starting in FY 28, as municipalities will gain equivalent revenue from the reimbursements. The total fiscal impact may vary based on the number of qualifying veterans and the value of the exempted properties.