Stowe voters will soon decide whether to double the amount of money the town brings in through its local option taxes.
A proposed amendment to the town charter would increase the two separate taxes – one on meals, rooms, and alcohol and the other on sales and use – from 1% to 2%.
On January 8, the board voted unanimously to advance the item to an Australian Ballot vote on Town Meeting Day in March. An initial public hearing about the proposed amendment took place January 14, and the second, final hearing was held January 28 at 5:30 p.m.
Municipal taxing privileges are dictated by a town’s charter. Increasing the local tax rate requires a public vote about a charter amendment, as well as final approval from the state Legislature.
Stowe’s state senators and representatives told the Stowe Reporter that they would favor a charter change if it reaches the Legislature.
Stowe voters approved its rooms, meals, and alcohol tax in 2006 and the sales tax in 2023.
Local option taxes are managed by the state, and revenue generated through those taxes flows to Montpelier before landing back in the town’s coffers. The state pulls a 25% administrative fee – which town’s typically recover through the state’s payments in lieu of taxes on non-taxable state-owned land in that town – and the remaining 75% goes back to the municipality.
The sales tax does not apply to necessities, such as fuel, groceries, medications, and certain types of clothing, such as aprons and underwear. It does apply to all other qualifying purchases by residents of and visitors to Stowe, including online purchases from retailers like Amazon and nearby businesses.
KEEPING COSTS DOWN
For more than a decade, various Stowe select boards have pitched local option taxes as a way to curb the property tax burden on residents. While the tax applies to residents, it generates the most amount of revenue from visitors who generally spend money year-round in town.
While some attendees at last week’s hearing called the taxes more regressive in nature because they also affect residents, they acknowledged the potential public benefit, given Stowe’s booming tourism economy.
Stowe’s existing local option taxes bring in around $3 million a year, and if voters decide to double those tax rates, that figure could double to $6 million – that’s roughly a third of Stowe’s $18.6 million municipal budget.
Revenue generated through local option taxes in Stowe currently fuels capital projects and bond debt, but with a potentially larger pot of cash on the horizon, select board members have discussed how else that money could be spent.
With no shortage of costly issues facing the town – including a lack of affordable housing, deferred maintenance on infrastructure and ever-increasing property taxes – the select board has not indicated how new revenue will be spent in the proposed charter amendment, rather allowing public opinion on the matter to surface.
Stowe resident Paul Sakash, who spoke at last week’s hearing, wants to see that money buy down local property taxes, which have increased by double digits in some cases in the last few years.
Statewide education funding is the primary driver of Stowe residents’ increasing tax rate, but town officials have no control over that figure. Stowe’s municipal tax rate has increased marginally, but an extra 1% could reduce the local tax burden and offset increasing state taxes for statewide education.
In March, Stowe voters will also decide whether to create a housing reserve fund, which is essentially a bank for money intended for housing initiatives. That vote will take place in person on Town Meeting Day.
The select board briefly discussed padding the housing reserve fund with local option tax revenue but again decided not to make a directive. Housing might not always be a consideration for the town, Sakash said, reiterating a sense of urgency to reduce property taxes.
Reprinted courtesy of the Stowe Reporter.
