(The Center Square) — Vermont cities and towns hit hard by last year’s flooding will get a break on property taxes this year under a bill signed into law by Gov. Phil Scott.

The measure, signed by Scott on Wednesday, directs the state Department of Taxes to reimburse municipalities for certain state education property tax payments if the local government granted state education property tax abatements to property owners for damage caused by severe storms and flooding in July 2023.

A fiscal note attached to the bill said the reimbursements will cost the state’s Education Fund an estimated $1.1 million in the next fiscal year.

“Absent any other changes in policy, the statewide homestead property yield and/or statewide non-homestead property tax rate will need to be adjusted to account for the anticipated cost of reimbursements,” the Legislature’s Joint Fiscal Office wrote in a report.

The Federal Emergency Management Agency says it has determined that nearly 3,000 homes in Vermont sustained some type of damage in the flooding, including at least 530 designated as having significant damage and 14 other homes destroyed. The flooding also impacted the state capitol, Montpelier, damaging restaurants and other businesses.

Vermont cities and towns have received dozens of abatement requests from the flooding, which, if approved, would leave local governments on the hook for hundreds of thousands of dollars in property taxes owed to the state.

To qualify for the relief, a city or town must have experienced a 50% or greater loss in value to the primary structure, a loss of use of the property for at least 60 days, a loss of access to utilities for at least 60 days or condemnation of the primary structure on the property.

Despite the relief for cities and towns, Vermonters could be digging deeper into their pockets with property tax bills projected to increase by an average of 18.5% next fiscal year, driven largely by a forecasted 12% increase in year-over-year education spending.

Under the projected rate hikes, the actual average homestead property tax rate will have a tax bill increase from $1.54 for every $100 of property value in the current fiscal year to $1.80 in the fiscal year 2025, which begins July 1, 2024, according to the tax office.

The average non-homestead rate is projected to rise from $1.60 for every $100 of property value in the current fiscal year to $1.86, the report noted.

If the proposed increases go through, property taxes on a $250,000 home in Vermont would increase by about $650 in the next fiscal year, according to the Tax Department.

State finance officials say a major driver of the property tax hikes is that many school districts face changes from the state’s pupil weighting system, which determines how education funding is distributed.

Scott has urged lawmakers to work with his administration to reduce the projected property tax hike and improve state taxpayers’ affordability.