On February 15, 2017

Fact checking important details of the 1 percent local option sales tax repeal

By Mike Solimano

“The 1 percent local option sales tax component of the options tax contributes approximately $400,000 to $500,000 to the annual General Fund budget. Who do you think is going to make that up if it is rescinded? You and me in our property taxes. As it is, we have an increase this year, with the full options tax a part of the budget,” was stated in a recent letter to the editor.
There’s been some confusion around this that I’d like to clarify. Currently, the town spends $280,000 on marketing and events (funded by the 1 percent option tax), and this year’s proposed budget includes an additional $100,000 to support the 2017 World Cup, should the resort hold that event (and only if). This brings the town’s events and marketing contribution to a total of $380,000 for fiscal year 2017– and this general fund expense would be removed from the town’s budget entirely in fiscal year 2018 if the “sales and use” portion of the 1 percent option tax is repealed.   The World Cup contribution is not a new tax expense to the town, rather a reallocation of the approx, $160,000 scheduled reduction in payments against the Green Mountain National Golf Course debt, which the Select Board determined in 2011 qualified as “economic development” spending. This means the currently proposed $380,000 in economic development spending for the coming fiscal year does not feature an increase of $100,000, but rather a reduction of $60,000 from last year. ​
With the 1 percent option tax, it’s important to understand that 1/3 of all money collected goes, by law, to the state of Vermont and that money is spent in other towns. The average tax revenue to the town of Killington from the “sales and use” portion of the 1 percent option tax over the past 7 full years was $445,000, and if this portion of the option tax is repealed for fiscal year 2018 the town of Killington will also be relieved of $380,000 of general fund expenses. The resort and KPAA will take over and pay for these marketing and event expenditures, leaving no gaps in summer programming and no negative impact to the town’s general fund.
Many in the town have argued that the town should not be in the “events” business, and the repeal of the “sales and use” portion of the option tax would allow the town to focus on public infrastructure improvements and municipal services and shed obligations for future events and marketing. All the while, the town’s general fund continues to benefit from the growth of the “meals and rooms” portions of the 1 percent option tax, which will remain intact and continue to grow each year in tandem with the resort’s summer business levels.
“The other question I have is, why 2018? Is it possibly so that when building the village, no sales tax will have to be paid on all the materials needed? Whose interests is our Select Board looking after? I don’t think they are looking after mine,” the letter-writer continued.
There’s a simple explanation as to why the Select Board is looking to the next fiscal year (July 2018) for the tax change, and it has nothing to do with the proposed Killington village. When citizens raised the issue of this tax repeal at a Select Board meeting a few months ago, the original proposal sought to move forward for fiscal year 2017. The Select Board decided it would be most prudent to delay for one year as the 2017 budget was already nearly complete and the extra time would allow for proper planning, debate and education, which is what we’re seeing in the community now.
I want to be clear: this tax change is expected to have little to no effect on most residents and local businesses, aside from 1 percent in savings on most purchases. If the repeal is passed, the entire Killington community will retain several hundred thousand dollars annually to be better invested in our community.

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