MONTPELIER, Vt. (WCAX) – Vermont towns and cities could soon have broad authority to institute a variety of local taxes. A bill before Governor Phil Scott would allow the municipalities to impose local-option taxes without legislative approval.
The fourth time was the charm for a new tax in the town of Berlin. Voters on Town Meeting Day approved one-percent local option taxes for sales, meals, rooms, and alcohol.
“Our total town highway budget is a little over a million dollars a year, which totally falls on the property taxpayers of Berlin,” said Berlin Town Administrator Ture Nelson. He says roads and infrastructure in town of about 3,000 are used by about 20,000 people daily. “I like to have a plan and be able to tell people what we are using this money for.”
He estimates the new taxes will generate $650,000 annually to pay for culverts, bridges, and paving projects that have been pushed back. “That’s no way to run a town — pushing off projects — when the residents of a town want to know when their road is going to get paved, when it’s going to get fixed,” Nelson said.
Williston was the first town to pass a local option tax about 20 years ago targeting shoppers flocking to big box stores. It was a chance to bring in more revenue to supplement local property tax collections. In the years since, 32 towns and cities — mostly those with significant numbers of retailers and restaurants — have some type of local option tax.
The Vermont League of Cities and Towns’ Ted Brady says short-term rentals and online sales are happening across the state and that imposing taxes on those services locally will help towns reduce their property tax burden. “The local option tax has given a relief valve on the property tax system here in Vermont so municipalities can continue to pave your roads, pay your cops, have parks and rec services — you go down the list,” he said.
If towns want to adopt a tax, they currently have to create or change their charter by a vote of residents. Then, the Legislature and governor have to give it their thumbs up.
But a provision in a bill passed by the Legislature would allow local voters to bypass lawmakers and pass their own local option taxes.
“I’m not a fan of raising any taxes but the horse is out of the barn on this one a long time ago,” said Gov. Phil Scott. The Berlin resident says it’s only fair that all towns be able to pass their own option taxes.