## Facts

- The Town of Cabot received a federal Urban Development Action Grant and, after a related loan was repaid, retained the proceeds as a locally controlled revolving fund used for community and economic development projects.
- The Town used a nonprofit entity, the Cabot Community Association, to help administer grants from the fund under criteria approved at town meeting.
- The United Church of Cabot, an active church building also used for secular community events, applied for a $10,000 grant to assist with building repairs, including work involving the steeple, stairwell, and interior areas.
- Town voters approved the grant at an annual town meeting.
- Two residents and taxpayers sued seeking declaratory and injunctive relief, alleging that using public funds to repair a house of worship violated the Vermont Constitution’s Compelled Support Clause.
- The trial court denied defendants’ motion to dismiss for lack of standing, found plaintiffs had standing, and issued a preliminary injunction barring disbursement pending further order.
- Defendants took an interlocutory appeal challenging standing and the preliminary injunction.

## Issues

1. Whether municipal taxpayers have standing to challenge a town’s grant to a church under the Vermont Constitution’s Compelled Support Clause when the grant money originated from a federal program but is under municipal control.
2. Whether the trial court abused its discretion by issuing a preliminary injunction prohibiting disbursement of the grant funds on the record presented.

## Decision

- The Vermont Supreme Court held plaintiffs had municipal taxpayer standing to pursue the Compelled Support Clause challenge.
- The Court rejected the argument that the funds’ federal origin defeated standing because the Town controlled and allocated the funds as part of its local fiscal program.
- The Court vacated the preliminary injunction, concluding the record did not support the necessary findings to justify extraordinary injunctive relief.
- The case was remanded for further proceedings on the merits.

## Legal Principles

- Municipal taxpayer standing exists to contest allegedly unlawful municipal expenditures, including alleged violations of the Compelled Support Clause, where the expenditure is a municipal decision affecting the use of municipal resources.
- Funds initially derived from the federal government may be treated as municipal for standing purposes when they are held, managed, and distributed at municipal discretion for local objectives.
- A preliminary injunction requires a sufficient evidentiary showing of irreparable harm and a merits showing (likelihood of success or serious questions with a balance of hardships favoring relief); a thin or undeveloped record may be inadequate.
- An appellate court may resolve standing while leaving the underlying constitutional merits for determination on a fuller factual record.

## Conclusion

The court permitted municipal taxpayers to challenge a town-approved grant to a church under the Compelled Support Clause despite the grant’s federal-source history, but it vacated the preliminary injunction because the limited record did not establish the required basis for interim relief and remanded for litigation of the constitutional claim on the merits.


Taylor v. Town of Cabot, 178 A.3d 313 (Vt. 2017)