Local select boards are revisiting the financial benefits of a local option tax as the Mad River Planning District continues to update possible yields from such a tax. Current data shows that Waitsfield could reap as much as $552,147 and Warren $495,736 if the towns adopt a 1% tax on rooms, meals, alcohol, and retail sales.
Because of Fayston’s relatively low number of businesses, state data needed to calculate that yield was not readily available. The Mad River Valley Planning District (MRVPD) and Fayston Select Board have reached out to the state seeking that data.
State changes if a local option tax is imposed willresult in higher yields for towns that adopt them, primarily because online sales can now be taxed as well. That means that Warren’s potential yield increased from $416,305 to $495,736 and Waitsfield’s increased from $465,358 to $552,147.
There are exemptions in the retail portion of the sales tax for food medicine and other necessities.
The MRVPD analyzed data from seven other Vermont towns that have LOTs and calculated the difference between the state reported retail sales figures and what each town received to determine the impact of online sales.
That analysis also showed that in Warren 24% of the funds raised by local LOTs would come from local residents and 76% of those funds would come from visitors and guests or $178 per household annually. In Waitsfield those figures are 25% and 75% or $221 per household annually.
To raise these kinds of funds in Warren and Waitsfield would require increasing property taxes by 14% in Warren and 24% in Waitsfield.
Across the state LOTs have become an increasingly common tool for towns to raise money for community needs. Currently 38 municipalities have LOTs, including Waterbury, Berlin, and Barre. Towns are using the funds to support infrastructure, public services, housing, and economic development.
Many towns direct LOT revenue toward infrastructure improvements. Waterbury enacted LOTs on retail sales, meals and alcohol, and rooms in 2024, using the revenue to reduce debt from major infrastructure investments and to support road work. Other communities use LOT funding to strengthen emergency services. Stowe, which has collected LOT revenue from meals, rooms and alcohol since 2010, added a retail LOT in 2023 to address rising costs and increased service demand linked to tourism, population growth, and declining volunteer availability. The additional revenue supports staffing, equipment upgrades and training, and Stowe now generates more than $2 million annually from its LOT.
Some municipalities focus LOT revenue on housing needs. Waterbury created a Housing Trust Fund in 2024 and committed $100,000 of its first-year LOT revenue to the effort. The fund includes a home improvement program modeled on a statewide initiative and offers grants of up to $30,000 to rehabilitate existing units or develop accessory dwelling units.
Economic development is another area where LOTs play a role. Ludlow voters approved a LOT in 2025 and expected to raise about $700,000 through retail, meals and alcohol, and rooms taxes. The revenue will help the town manage the strain created by dramatic population swings between off-season and peak tourism periods, allowing visitors to contribute to maintaining the infrastructure they rely on.
LOTs have also supported recreation facilities. St. Albans adopted a LOT in 2020, using the revenue to fund a new community pool and sidewalk improvements. Waterbury has directed part of its LOT funding to trail maintenance, reflecting the importance of recreational assets to both residents and visitors.
The Mad River Valley (MRV) has previously explored LOT options. Beginning in 2018, the Mad River Valley Planning District and the Mad River Valley Chamber of Commerce reviewed strategies for community development and recommended a LOT as a stable revenue source. A tri-town effort among Warren, Waitsfield and Fayston advanced through early 2020 but ended when Waitsfield voters rejected the required charter change. New state legislation adopted in 2024 and 2025 removed the charter-change requirement, renewing interest in examining how LOT revenue could support MRV priorities in the future.
