Vermont League of Cities & Towns The new legislative session will officially begin on January 6, 2026, and the VLCT Advocacy team will tackle some unfinished business and emerging issues in the second half of this biennium. By all accounts it looks like this could be a difficult session. With competing priorities like housing, healthcare, education, property taxes, and transportation fund shortfalls, the affordability agenda will be front and center.
Our advocacy team has spent the summer and fall months engaged in legislative study committees, working groups, rulemaking, and working with members to develop some new and refined policy positions ahead of the session.
In this legislative preview we announce our new 2026 Legislative Priorities, share important updates on the implementation of both the Community and Housing Infrastructure Program (CHIP) and Act 181, review the state government’s FY26 budget forecast, and more.
Announcing VLCT’s 2026 Legislative Priorities
Vermont’s municipalities need support from the state in meeting the obligations and functions of today's local government and want state government to take action to solve the challenges of the 21st century.
At VLCT’s 2024 Annual Meeting, all present and voting members voted unanimously to adopt the 2025-2026 Municipal Policy. In the 2025 Legislative Wrap-Up, we recapped the major legislative actions from last year, which included some big victories for Vermont municipalities, such as significant expansions to municipal financial authority, a new revolving loan fund for municipal infrastructure, the protection of municipal legal trails, and – last but not least – the greatest investment in infrastructure and housing in Vermont state history, known as CHIP.
To develop our priorities for this session, we considered
- what issues are most urgent and pressing for local communities,
- which policy areas are most likely to be taken up by lawmakers this year, and
- whether VLCT is the right organization to lead the debate.
For several years, the top concern reported by local officials in VLCT member surveys has been the availability and affordability of housing. Our list of legislative priorities includes a number of zoning and land use related legislative actions, as well as a new municipal taxing authority for short-term rentals, brownfields investment, and a request to match state property tax relief with municipal stabilization agreements to support infill-scale housing development.
A rising area of concern for local leaders is the perennial funding shortfall within the state transportation budget – which is exacerbated by rapidly rising constructions costs. When adjusted for inflation, transportation fund investments have fallen below 2013 levels. VLCT will be proposing a number of legislative solutions to bolster transportation revenues and to strengthen local investment in roads and bridges.
We will also bring forward a number of proposals to support local law enforcement, improve the state’s delivery of social services, and expand municipal revenue authorities in order to alleviate local property tax burdens.
Lower Property Taxes
Authorize and enable municipalities to raise local revenue, control expenses, and avoid state-to-municipal cost shifts.
- Return the growing Payment In Lieu Of Taxes (PILOT) Fund surplus to the municipalities that raised it.
- Alleviate local tax burdens by holding municipalities harmless for uncollected state property taxes.
- Share revenue with municipalities supporting cannabis retail and cultivation industries.
- Create a monetary cap for municipal liability commensurate with the State’s.
- Provide local voters with the authority to impose municipal service fees on properties with state-mandated property tax exemptions.
- Require local legislative body approval of the county operating budget.
- Increase per parcel payments and provide small-town minimums to cover the modern cost of grand list maintenance, appraisal, and appeal.
- Modernize Public Records Law to support compliance and allow municipalities to recover the true cost of producing records.
Build Housing
Support the creation of the new housing that municipalities need, have envisioned and planned for, and allow in local zoning.
- Allow for new municipal authority to impose taxes and raise fees to regulate short-term rentals.
- Match state property tax relief with municipal stabilization agreements to support infill-scale housing development.
- Accelerate brownfield cleanup and redevelopment.
- Further limit appeals of housing projects within Tier 1 areas.
- Extend temporary Act 250 exemptions and delay implementation of the Road Rule and Tier 3 jurisdiction.
- Eliminate requirements for municipal enforcement of existing Act 250 permits within Tier 1A areas.
- Exempt agricultural activity from municipal regulation, except for in Act 250 exempted areas.
Promote Public Safety
Support municipalities in delivering public safety and fulfill the state’s obligation to deliver public health and human services.
- Keep perpetrators of serious and violent offenses in Vermont state custody pending extradition, or waiver of extradition, to the state where the warrant is held.
- Establish a default statewide ban on firearms in designated municipal buildings/property, from which a municipality may opt out.
- Create felony charge for reckless endangerment with a firearm.
- Institute flexible alternatives to the residential Vermont Police Academy training program.
- Require that existing state case management personnel provide field-based services including pretrial supervision and services by DOC.
- Mandate the Agency of Human Services to reinstate public inebriate programs.
- Provide stable, reliable, and ongoing funding for providers of field-based and other services that support individuals experiencing unsheltered homelessness.
- Support the creation of emergency cold weather, temporary, and permanent shelters, including opening State buildings and/or land, sufficient to double the total shelter bed capacity statewide up to 1,200 beds.
- Provide municipalities with resources to remove hazardous materials from encampments and public spaces.
Prioritize Transportation
Fund and fix the municipal roads and bridges that all Vermonters rely on.
- Diversify and increase Transportation Fund revenue sources.
- Direct the full Purchase and Use Tax on motor vehicles to the Transportation Fund.
- Remit a portion of registration fees and excess weight permit fees to the municipality in which the vehicle is registered.
- Fully fund core municipal transportation programs – Town Highway Aid, Town Structures, and Town Bridges – according to need.
- Provide incentives for municipalities to take over state highways that function as main streets.
- Allow VTrans to enter into agreements with municipalities for use of state-owned equipment for small transportation projects.
Vermont League of Cities & Towns. December 11, 2025. https://www.vlct.org/
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