H.232, introduced by Representative Waszazak of Barre City, aims to establish the Vermont Municipal Response and Recovery Special Fund to provide direct financial assistance to municipalities for flood response, prevention, and resiliency projects. The bill mandates that 0.5 percent of General Fund revenue be deposited into this Special Fund annually, with all interest earned on the Fund's balances also credited to it. The Fund will be exclusively used for supporting qualifying municipalities in their flood-related efforts and will not disburse any funds before July 1, 2026.

Additionally, the bill requires the State Treasurer to submit a report to the General Assembly by December 1, 2025, detailing recommendations for the Fund's use, guidelines for equitable distribution of funds, and potential legislative amendments to enhance support for flood-impacted communities. The report will also address simplifying the application process for state grants related to municipal flood recovery and resilience projects. The act is set to take effect on July 1, 2025.