Shumlin Wants to Forgive $6M From Cities and Towns

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Spurring job growth and increasing affordable housing can be tough work in a tight economy. So, Gov. Peter Shumlin wants the Legislature to strengthen Vermont’s downtowns by simplifying the state’s special municipal tax district law.

The governor said on Wednesday the state shouldn’t collect $6 million that the auditor’s office says several towns owe to the state education fund.

"We’re not forgiving money, we’re growing money because every time you create jobs and you take a downtown building or a downtown area that is in decay, you improve it and you improve the tax rolls," Shumlin said, standing with mayors and town managers outside the renovated Champlain Mill in Winooski to make his pitch. He said the original legislation that created municipal tax districts has become so complicated that a strict interpretation could stunt economic growth. He said the law should tell communities exactly what to do once they’re granted a tax district.

"Let’s clarify the future and wipe the slate clean for the past so that we can continue to grow jobs and economic opportunities in our downtowns," Shumlin said.


Several Vermont communities have used tax increment financing, or TIF districts, to encourage new development. The rationale is that the new development creates additional, incremental state property tax revenues. Towns that are approved for a TIF district are allowed to keep a portion of those revenues to build public projects.

An auditor’s report two years ago found that Winooski, Burlington, Milton and Newport had not followed some state laws related to the districts and had underpaid the education fund.

"I would think that if we did owe $2.8 million we would have gotten an invoice from the state by now," said Brian Palaia, the town manager in Milton. "It’s been two years since this audit report was done, so I think it’s really a matter of clearing the air."

Milton never agreed with the findings of the audit report, Palaia added.

Some criticize tax increment financing districts for diverting funds away from the education fund. But Palaia argues Milton’s tax district has created nearly 900 jobs in 10 years.

"These are not low-paying jobs," Palaia said. "These are important jobs to the community and to the region and this TIF district is going to return millions of dollars to the state education fund."

Democratic State Auditor Doug Hoffer is standing by his office’s report, which was conducted by his predecessor, Republican Tom Salmon. Still, Hoffer agrees with the governor that current law doesn’t allow the state to collect unpaid funds.

"It’s a very awkward position for anybody – the Legislature and the governor – to be in," Hoffer said. "There’s no slate to be wiped in a legal or literal sense. If the state were to try to collect those funds, I think it would be expensive and time consuming and I don’t think that would be in anybody’s best interests."

Hoffer said, on the other hand, lawmakers should insist on better oversight.

For those who believe that TIF districts are effective tools for economic development, he said, they owe it to taxpayers to make sure the program runs as efficiently as possible.

Earlier: Salmon Says Audit Shows Problems with Some TIF Districts

VPR News: Auditor Says Burlington Mismanaged TIF Fund

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