State News
June 11, 2015

Central Vermont towns report good first quarter revenue for local options tax

By Stephen Seitz

Area towns with the local options sales, meals and rooms, and alcohol taxes have had a good first quarter, according to various town officials.

Rutland Town treasurer Donna Zeller said the taxes brought in $249,327 in the first quarter of 2015. The town assesses all three local options taxes: Sales tax, rooms tax, and meals/alcohol tax.

“We use the money to bring property taxes down,” she said. “It gets applied to the next fiscal year.”

Killington also collects options taxes on sales, rooms, and meals/alcohol. Town Manager Seth Webb said the first quarter brought in $483,628.

“It’s the second highest quarter since 2009,” Webb said. “The town voted to adopt a local options tax in 2008. This is considerably up from 2009… We had a good ski season this year.”

Webb said that 2014 is the best year so far, when the town took in more than $490,000.

The local options tax adds one percent to existing state sales, rooms, and meals/alcohol taxes. Communities deciding to adopt these taxes may choose to add one of these option taxes, two, or all three.

Now any town in Vermont may adopt these taxes. But that was not always the case. When the legislation passed in the mid-1990s, the criteria set were that the 1997 education property tax should come to less than $1.10 per $100 of equalized education property value, or the equalized grand list of personal property, business machinery, inventory and equipment is at least 10 percent of the equalized education grand list. Towns in which the combined education municipal tax rate would rise by at least 20 percent in fiscal 1999 were also allowed to impose the taxes. That meant only 76 Vermont towns had the choice of adopting these taxes.

However, later the Legislature amended §138 (the bill on Title 24 pertaining to local option taxes) allowing municipalities to vote on adding options taxes to their region. The amendment stated: “If the legislative body of a municipality by a majority vote recommends, the voters of a municipality may, at an annual or special meeting warned for that purpose, by a majority vote of those present and voting, assess any or all of the following: (1) a one percent sales tax; (2) a one percent meals and alcoholic beverages tax; (3) a one percent rooms tax.”

Earlier this year, Woodstock voters decided to adopt two of the three potential local options taxes: rooms and meals/alcoholic (not sales). The vote passed by a very slim margin, with 363 votes in favor to 354 against. According to the warrant article, the money will be used for economic development. The tax goes into effect in the next fiscal year, which starts on July 1. About 60 percent of the money raised will go into promotional campaigns, 30 percent will go to community projects, and the remaining 10 percent will administer the program.

Two years ago, Woodstock voted down a proposal to raise $50,000 to hire a part-time economic development director, but that would have not have left enough money over to pursue much in the way of economic development projects.

Eleven Vermont towns that assess all three local options taxes are Dover, Killington, Manchester, Middlebury, South Burlington, Rutland Town, Stratton, Saint Albans Town, Williston, Winhall, Wilmington.

Brattleboro, Stowe and Woodstock assess two of the three local option taxes: rooms and meals/alcohol (not sales.) Burlington assesses only local sales option tax through the state.  However, the cities of Burlington and Rutland impose their own meals, entertainment and lodging tax as authorized by their city charters.

According to the Vermont League of Cities and Towns, in 2014 the local option sales tax generated $14,251,550 for participating towns. The combined rooms, meals/alcoholic beverage taxes brought in $6,116, 984, last year.

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