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1 H.44
2 Introduced by Representative Dolan of Waitsfield
3 Referred to Committee on
4 Date:
5 Subject: Taxation; local option tax; small towns
6 Statement of purpose of bill as introduced: This bill proposes to allow towns
7 with a population of 2,400 or fewer residents to vote to establish a local option
8 tax. The local option tax established under this bill would allow towns to
9 receive, after reduction for the costs of administration, 75 percent of the local
10 option tax revenue collected within the town’s jurisdiction and the remaining
11 taxes would go to the State. If a town’s population were to exceed 2,400
12 residents, the revenue allocation would revert to the statutory default of 70
13 percent of the revenue going to the town and the remaining 30 percent going to
14 the State after reduction for the costs of administration.
15 An act relating to local option tax in small towns
16 It is hereby enacted by the General Assembly of the State of Vermont:
17 Sec. 1. 24 V.S.A. § 138 is amended to read:
18 § 138. LOCAL OPTION TAXES
19 (a) Local option taxes are authorized under this section for the purpose of
20 affording municipalities an alternative method of raising municipal revenues to
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1 facilitate the transition and reduce the dislocations in those municipalities that
2 may be caused by reforms to the method of financing public education under
3 the Equal Educational Opportunity Act of 1997. Accordingly:
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5 (3) a local option tax may only be adopted by a municipality in which:
6 (A) the education property tax rate in 1997 was less than $1.10 per
7 $100.00 of equalized education property value; or
8 (B) the equalized grand list value of personal property, business
9 machinery, inventory, and equipment is at least ten 10 percent of the equalized
10 education grand list as reported in the 1998 Annual Report of the Division of
11 Property Valuation and Review; or
12 (C) the combined education tax rate of the municipality will increase
13 by 20 percent or more in fiscal year 1999 or in fiscal year 2000 over the rate of
14 the combined education property tax in the previous fiscal year; or
15 (D) the population is 2,400 or fewer residents.
16 (b) If the legislative body of a municipality by a majority vote
17 recommends, the voters of a municipality may, at an annual or special meeting
18 warned for that purpose, by a majority vote of those present and voting, assess
19 any or all of the following:
20 (1) a one percent sales tax;
21 (2) a one percent meals and alcoholic beverages tax;
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1 (3) a one percent rooms tax.
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3 (d)(1) Except as provided in subsection (c) of this section and, in
4 subdivision (2) of this subsection with respect to taxes collected on the sale of
5 aviation jet fuel, of the taxes collected under this section and in subdivision (3)
6 of this subsection with respect to taxes collected in small towns, 70 percent of
7 the taxes collected under this section shall be paid on a quarterly basis to the
8 municipality in which they were collected, after reduction for the costs of
9 administration and collection under subsection (c) of this section. Revenues
10 received by a municipality under this subdivision (d)(1) may be expended for
11 municipal services only, and not for education expenditures. Any remaining
12 revenue shall be deposited into the PILOT Special Fund established by 32
13 V.S.A. § 3709.
14 (2)(A) Of the taxes collected under this section on the sale of aviation jet
15 fuel, on a quarterly basis, 70 percent of the taxes shall be paid to the
16 municipality in which they were collected, and 30 percent shall be deposited in
17 the Transportation Fund.
18 (B) For a municipality with 2,400 or fewer residents that adopts a
19 local option tax pursuant to this section, 75 percent of the taxes collected under
20 this section on the sale of aviation jet fuel shall be paid to the municipality in
21 which they were collected, and 25 percent shall be deposited in the VT LEG #365590 v.1
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1 Transportation Fund. If a municipality’s population exceeds 2,400 residents
2 after voting to assess a local option tax pursuant to this section, the taxes
3 collected under this section on the sale of aviation jet fuel shall be paid
4 pursuant to subdivision (A) of this subdivision (2).
5 (C) All revenues referenced in subdivision subdivisions (A) and (B)
6 of this subdivision (2) shall be used exclusively for aviation purposes
7 consistent with 49 U.S.C. § 47133 and Federal Aviation Administration
8 regulations and policies.
9 (3)(A) Except as provided in subdivision (2) of this subsection (d) with
10 respect to taxes collected on the sale of aviation jet fuel, for a municipality
11 with 2,400 or fewer residents that adopts a local option tax pursuant to this
12 section, 75 percent of the taxes collected under this section shall be paid on a
13 quarterly basis to the municipality in which they were collected, after reduction
14 for the costs of administration and collection under subsection (c) of this
15 section, and any remaining revenue shall be deposited into the PILOT Special
16 Fund established by 32 V.S.A. § 3709. Revenues received by a municipality
17 with 2,400 or fewer residents under this subdivision (3)(A) may be expended
18 for municipal services only, including in infrastructure and housing, and not
19 for education expenditures.
20 (B) If a municipality’s population exceeds 2,400 residents after voting to
21 assess a local option tax pursuant to this section, the taxes collected under this VT LEG #365590 v.1
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1 section shall be paid to municipalities and deposited in the PILOT Fund and
2 shall be expended by municipalities pursuant to subdivision (1) of this
3 subsection (d).
4 (e) As used in this section, “municipality” means a city, town, or
5 incorporated village.
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7 (g) If the legislative body of a municipality by a majority vote recommends
8 or by petition of ten 10 percent of the voters of a municipality recommends, the
9 voters of a municipality may at an annual or special meeting warned for that
10 purpose by a majority vote of those present and voting rescind any or all of the
11 local option taxes assessed under subsection (b) of this section.
12 Sec. 2. EFFECTIVE DATE
13 This act shall take effect on July 1, 2023.
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Statutes affected: As Introduced: 24-138