Session Ends with Sweeping Changes to States Education & Property Tax Systems
This year’s session included measures providing relief for properties impacted by stormwater regulations, support for housing development, revisions to FEMA flood map requirements, and – most notably – significant changes to education funding and the property tax system.
Questions?
Contact: Peter Tucker
Advocacy & Public Policy Director
peter@vermontrealtors.com
(802) 229-0513
Act 37 gives municipalities more authority and support in managing stormwater systems. It allows towns that take full legal responsibility for a stormwater system to charge special assessment fees to system users. The act also extends key compliance deadlines for the three-acre stormwater permit – until October 1, 2028, in designated watersheds, and until October 1, 2038, in all other watersheds.
The act repeals the sunset on the Clean Water Surcharge tied to the property transfer tax and broadens eligibility for both the Municipal Stormwater Implementation Program and the Developed Lands Implementation Program. These programs can now provide financial assistance to help meet three-acre permit requirements.
The act directs the Clean Water Board to recommend at least $1 million annually for the Municipal Stormwater Implementation Program through October 1, 2032, and mandates a $5 million funding recommendation for the program in fiscal year 2027.
Act 69 advances a broad package of housing initiatives aimed at increasing supply, improving safety, and expanding access to affordable housing across Vermont.
It continues funding for the Vermont Housing Improvement Program (VHIP), which offers 10-year forgivable loans to bring non-code-compliant rental units and accessory dwelling units (ADUs) up to standard. It also creates the Vermont Manufactured Home Improvement and Repair Program, supporting upgrades and new development in mobile home parks.
The act establishes the Vermont Infrastructure Sustainability Fund, a revolving loan fund administered by the Vermont Bond Bank to provide low-interest financing or bond purchases that help municipalities expand infrastructure capacity.
It includes additional funding for Brownfield site cleanup and directs the Land Bank Workgroup to develop legislative language to establish statewide or regional land banks.
To support renters, the act launches a Positive Rent Reporting Pilot Program, working with up to 10 property owners to report on-time rental payments to credit bureaus – helping tenants build credit histories. It also expands fair housing protections to include citizenship and immigration status.
A key provision – the Community Infrastructure Housing Program (CHIP) – allows affordable housing projects to retain up to 85% of the increase in the grand list to repay infrastructure development bonds (75% for market-rate projects). All housing developed under this program must be used as a primary residence for the life of the bond, expected to be 20 years. While aimed at ensuring long-term occupancy, this provision may limit the pool of potential buyers, raising concerns about marketability.
Lastly, the bill formally updates Vermont’s fire code to require UL 217 smoke detectors, while still recognizing existing photoelectric detectors as valid.
This act simplifies flood disclosure requirements in real estate transactions. Sellers are no longer required to state whether a property is located in a FEMA-designated special or moderate flood hazard area. Instead, they must provide buyers with a copy, digital link, or electronic version of the official FEMA flood insurance rate map for the property. If no map is available, the seller must disclose that to the buyer.
Act 73 introduces significant changes to Vermont’s education governance and funding systems, aiming to improve equity and stabilize property taxes.
Key Provisions
- Education Governance Changes
- The act requires the formation of larger school districts, effective July 1, 2028, following recommendations from a newly created School
District Redistricting Task Force. It also mandates statewide standards for class sizes and graduation requirements.
CTE and Pre-K Updates
- The General Assembly must revise the career and technical education (CTE) and prekindergarten systems during the 2026 session.
New Statewide School Calendar
- The Agency of Education will implement a uniform statewide school calendar beginning with the 2028–2029 school year.
New Education Funding Formula
- Starting July 1, 2028, Vermont’s existing education finance system will be replaced with a foundation formula—a fixed, inflation-adjusted base amount of $15,033 per pupil, with added weights for pre-K students, English learners, and economically disadvantaged students.
Property Tax Reform
- The act replaces the current statewide property tax credit with a capped homestead exemption, offering increased relief for lower-income households. For example, households earning $25,000 or less will receive a 95% exemption on the first $425,000 of their homesite value.
Tax Classification Study
- The Department of Taxes must study and propose a new tax classification system for non-homestead properties by the 2026 session. Without legislative action, the proposed classification will be repealed on July 1, 2028.
Regional Re-Appraisal System
- Beginning January 1, 2029, the act transitions full property reappraisal responsibilities from individual municipalities to regional assessment districts, overseen by the Department of Taxes.
This sweeping legislation represents one of the most comprehensive changes to Vermont’s education and property tax systems in decades.