Senate Finance passes hotel fee over Scott's veto threat - VTDigger

Senate Finance passes hotel fee over Scott’s veto threat

Sen. Ann Cummings, D-Washington. Photo by Anne Galloway

Sen. Ann Cummings, D-Washington. Photo by Anne Galloway

The Senate Finance Committee passed a new tax on hotel stays Thursday night, despite repeated warnings from Gov. Phil Scott that he would veto any budget that raises new taxes or fees.

The committee passed the amendment 5-1 after 8 p.m. on Thursday. The amendment would assess the $2 per night occupancy fee, raising as much as $7.2 million per year.

The Vermont Housing Conservation Board, a quasi-public nonprofit, would use $2.5 million of the revenue to make payments on the $35 million housing bond that Scott proposed in his budget. The remainder would go to a water quality fund that would pay for Lake Champlain cleanup.

The amendment was on S.100, an omnibus housing bill that passed the Senate Economic Development, Housing, and General Affairs Committee last week. The bill facilitated the $35 million housing bond for low-income and middle-income people that Scott requested in his original budget.

Additionally, the amendment puts S.99, a bill that Scott supported as a way to make it easier for some areas to use tax increment financing, into the same bill as S.100, which contains the new occupancy fee.

“This committee made this vote with our eyes wide open,” said Sen. Ann Cummings, D-Washington, the chair of Senate Finance. “We are aware of what the governor has said.”

Cummings said the Legislature has been making painful cuts to government for 10 years, and investing in housing is a form of economic development. “We did what was best for the people of Vermont,” she said. The governor needs to make his own decision about that.”

Scott’s budget proposed to fund the $2.5 million annual debt service housing bond using an additional $1 million annual appropriation to the Vermont Housing Conservation Board. The Scott administration used $1.5 million from the organization’s existing budget for the remainder.

The House Appropriations Committee planned to cut the additional $1 million from the budget, meaning that the Vermont Housing Conservation Board would have needed to come up with the full $2.5 million.

“We looked at this fee,” Cummings said. “It’s been talked about around this building for some time.” She said between 80 and 90 percent of the revenue would come from out-of-staters, and Vermont’s rooms and meals taxes would still be lower than many major cities.

Erhard Mahnke, the coordinator of the Vermont Affordable Housing Coalition, an umbrella organization that includes the Vermont Housing Conservation Board, said he was in the room when the fee passed.

Word came down from the governor’s office that Scott would veto the occupancy fee.

Mahnke said the Vermont Housing Conservation Board has already foregone more than $45 million over the past 16 years, money that could have built 1,000 units of affordable housing.

“VHCB would be dedicating $2.5 million of its base funding for 20 years,” without the new funding, Mahnke said. “That was a concern for us, and we had our (occupancy fee) proposal in the hopper, and Senate Finance saw the revenue sources as an opportunity to make sure that the governor’s proposal could happen without doing harm to VHCB.”

Rebecca Kelley, the spokesperson for Scott, doubled down on Scott’s position Friday morning in a press release. She said Senate Democrats are “playing politics at the expense of Vermonters by inserting this new fee into a bill that will propose affordable and sustainable housing for all.”

“This tax will unnecessarily increase the cost of hotel and motel stays, straining our tourism sector, which contributes $2.5 billion to our economy annually,” Kelley said. “Vermonters would share the actual burden of this tax increase as it will impact the cost of weddings, special events, overnight stays, and more.”

The Senate Economic Development Committee on Friday morning raised concerns about putting S.100 and S.99 into the same bill, but the chair Sen. Kevin Mullin, R-Rutland, opposed the occupancy fee.

Meanwhile, the committee continued discussion of new fees on fantasy sports websites. Members agreed to raise $400,000 a year by taxing companies’ gross revenue from Vermonters at 6 percent, and $200,000 more through a $50,000 registration fee.

“No matter what, I have to be opposed to the Finance (Committee) version of the bill,” Mullin said to his committee. “I’m just giving you the heads up. I’m just against the tax, basically.”

Mullin joked that he was not worried about the bill in its current form becoming law because he has a “friend with a pen” who will veto the proposal.

Sen. Phil Baruth, D/P-Chittenden, said: “Then we have nothing. If that’s the governor’s strategy, then… you have a legacy of nothing.”

Sirotkin asked: “What about the fantasy sports fee? Is he going to veto that?”

Mullin responded with a smile: “I’m sure I can sell that.”

Erin Mansfield

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