Business & Economy

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.”

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Erin Mansfield

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  • Craig Powers

    Let’s get them out-of-staters! Senator Cummings, and the others voting for this tax increase, simply cannot help themselves. Thankfully Gov. Scott will hopefully veto this new tax.

  • ruth sproull

    I wonder if the legislators think about who will have to collect this fee. Sure, it’s good to contribute to the cause however assessing a $2 tax to each room night is a bookkeeping nightmare. Small, home-occupation lodging establishments like the one I own have been hit from several sides this year. First, with the new health department rules which despite our pleas to not have “one size fits all” regulation, LCAR approved 30 pages of new rules which regulates small establishments like large hotel chains. Now a $2 tax which with our simple bookkeeping software used to run our businesses will be very difficult to collect and then pay the state. A percentage tax increase would have been much easier and done the same thing. Of course, if you’re running a business with two rooms or fewer you not only don’t have to follow the health department rules but you won’t have to pay this tax either. Three rooms or more, even if the business is also your home, and you’re expected to operate like a Comfort Inn (even though you don’t have the wherewithal to really do so.)

  • Neil Johnson

    Our budget has gone up 16 years in a row….

    How can representatives state blatant lies?

    Cummings said the Legislature has been making painful cuts to government for 10 years, and investing in housing is a form of economic development.

  • Neil Johnson

    All this millions of dollars for affordable housing. Our contest for $1,000 came up with 3 easy ways to have homes from $90,000 to $123,000 with no state or federal tax dollars required. We have offered to present before our select board but they don’t seem interested.

    Apparently the state through centralized planning has given the word that tiny house, smaller than a shed are the way to entice new people to our state and solve our affordable housing crisis. I have nothing against small homes, lived in 270 sq. ft. for some time, I just it’s odd the state dictate the size and style of home.

    Meanwhile they pass regulations that dictate the size of a dog house. Does anyone see the irony?

    In our little town we’ll be spending hundred of thousand per year on this, if we’re “lucky” they’ll try and railroad the huge sewer system again, of which the town voted down 3x before. It’s not needed

    We can easily solve our affordable housing crisis with no state money, all we have to do is say , yes we’d like some.

  • Daphne Black

    TWO DOLLARS? They can’t charge tourists $2 extra or it would be bad for business? Ridiculous.

    “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.”

    It’s two dollars. Come on!

    • Neil Johnson

      And that is the perfect answer everybody in Government wants you to say. It’s exactly like the appliance dealer selling you warrantee protection.

      It is quite clever, we have 9% tax already which is very high. On a hundred dollar room that would equal a 2% tax increase, It would clearly make most rooms a 10% tax, which people would notice.

      It’s just two dollar is how they’ve raised our taxes in every single category and fee across the state. It’s all done so you don’t notice.

      And the final result is we are spending 2x more person than our neighbor in NH. Our spending per citizen in Vermont exceed that vast majority of our nation….our taxes are double dozens of states, that’s the real reason people are complaining. If we could run our state on half the money wouldn’t want that? Your $5,000 property tax bill could be $2500…..and you get the same results? That’s what Vermonters are clamoring about.

      All done $2 at a time, here there everywhere.

      • Edward Letourneau

        “…Your $5,000 property tax bill could be $2500…..and you get the same results? That’s what Vermonters are clamoring about.” — That is what the people in Montpelier and town boards do not get. They all think if you spend more, people will come here. When the reality is people are leaving because of the taxes and fees they get nothing for.

      • Daphne Black

        This $2 is for tourists to pay at hotels.

        • Michael Gardner

          You do realize that every tax like this causes more and more business to go underground. At least here in Southern Vermont hotels and motels are struggling to compete with services like HomeAway where the proprietors are charging NO tax, and claiming NO income. Maybe it isn’t a struggle in Burlington but down here the economy and the tourists aren’t so flush with cash

        • Cheryl Ganley

          Vermonters also use hotel rooms so it would no be 100% tourist paying this bill. Nevertheless, last year the state spent over 3 million on hotel rooms for the homeless due to extremely cold weather. So us the taxpayer will also be covering part of this “fee”.

      • Daphne Black

        This is $2 for a tourist to stay in a hotel. Are you saying that someone would choose not to come to Vermont and would go to a worse place for the sake of $2? It’s a rounding error in vacation money.

        This isn’t about the tax burden of Vermonters, it’s for tourists to pay who ought to be glad to pay $2 extra to come to a great place like Vermont.

        • Neil Johnson

          And people think it’s ok to shake down their guests for every penny you can? People know a good deal when they see them and return. If a family spends $5,000 on a Vermont vacation we tax them a minimum of $500. You don’t think that’s real money? Most people do.

        • Craig Powers

          We already have a 9% rooms and meals tax. That is enough! Tourists do look at the bottom line when choosing a destination. Keep adding taxes and fees onto things and soon you have killed the golden goose.

        • Dan DeCoteau

          I believe there is also a new advertising fee at hotels now too. A friend stayed in a hotel and noticed the other fee. When asked, the hotel clerk said the state was collecting an advertising fee to pay for tourist advertising promoted by the state.

          • Neil Johnson

            Oh Dan, that’s a fee not a tax!……nobody will notice.

            As an investor, could you imagine if you were guaranteed a 12% return on any business you opened with no money down? No worries about paying the bills or making payroll? No liabilities if it fails? Could you imagine a stock market deal that sweet? Yet that is where our state puts itself.

            The state is pretty amazing on collecting taxes, that aren’t really taxes. I think there is another one on your electric bill. They’ve got fees hid everywhere. Easter egg tax bombs for everyone.

            Don’t worry it’s only $2. lol

      • Dan DeCoteau

        Incremental taxation and incremental legislation. A little bit at a time so you don’t notice! Just like putting the frog in warm water on the stove (a comforting feeling) until the heat is turned up to the point that the frog is boiled to death. Nothing will change in Vermont until you change those who control the (legislature) heat. When will the voters finally reach the boiling point?

    • Matt Young

      Daphne, and what level of ADDITIONAL tax would be too much? Is that a
      decision you alone should make? Maybe we should tax cat ownership, $100 per month, okay?

      • Daphne Black

        A decision I alone should make? I missed the part where I became Empress of Vermont and could lay down my arbitrary rulings. What an odd remark!! I was stating an opinion in blog comments, same as everyone else.

        As for the cat ownership, have you decided I’m a crazy old cat lady because I have a gravatar image of one? You do realize the internet is full of cat pictures, right?

        A lot of bizarre assumptions that add up to a pretty silly comment on your part, Matt.

        • Matt Young

          Daphne, you said, “TWO DOLLARS? They can’t charge tourists $2 extra or it would be bad for business? Ridiculous.” The first “ridiculous” assumption is that only tourists stay in Vermont hotels. People here on business, Vermont youth sports teams traveling to another part of the state, a family looking at a college, a Vermont family with frozen pipes etc etc. You are correct that $2 in and of itself may be inconsequential, but the $2 is just another additional tax or fee on top of many others. It’s pretty simple to suggest, geez it’s only $2 but it goes a little deeper than that. The cat comment was to try to make you understand how easy it is to spend someone else’s money but I’m not sure I explained it well.

          • Daphne Black

            Listen, you literally asked me if that was a decision I alone should make. ??? I made no such statement, nor expressed such a desire even. This is what I responded to. Disagreeing with you is not the same as wanting to be Queen and boss everyone.

            Your second comment is to the point of this article, unlike your first one. I wouldn’t have taken exception to that.

            Well, aside from the cat thing, I understand the concept you are trying to get at, but it was a silly example, and honestly I feel like you were making assumptions about who I am to make a “cat tax” a meaningful example.

  • Anthony Redington

    The intent of those in the low income housing field was for the State of Vermont to step into housing assistance areas abandoned by the federal government more than a decade ago–the homeless, very low income, seniors, etc, face a 311 decline in available federal “livable rent” units in VT by October 1 BEFORE further federal cuts kick in. Literally thousands of Vermonters are on waiting lists for these “livable rent” units where one pays no more than 30% of income. The $2 fee would generate about 1,500 “livable rent” units–most non-profit housing cannot serve very low income and homeless without further such assistance. We have 500 empty apartments in Burlington, most in a generation, a third our citizen apartment dwellers live in non–profit housing–no need for more housing units except for seniors with assistance. What is needed is housing assistance! The $2 nightly lodging fee would bring about 1500 homeless and needy households livable rents! Has Trump malign neglect now infected the State House? Tony Redington Burlington

    • Neil Johnson

      This is the solution the keeps us forever in poverty. We can have people owning their own homes for less than renting. Then at retirement SS will actually cover their living expenses or a good share. Instead we have people renting for life. You can have affordable housing that can be afforded by minimum wage. We do not need federal funds or state funds to come up with any very affordable structures in which Vermonters can reside. Complete fallacy. We’ve regulated this possibility, created our own problems.

      • James Hall

        Over a period of years, history has told us that these fees and taxes, never stay at a current level, they never sunset; the only thing they do is provide stepping stones/rungs to more of the endless same, until we price ourselves out of business; forever. Look at NH, along the border. These people over there are grinning like Chesire cats, because of our stupidity in this game. For the life of me, I cannot see what is so difficult to understand here.

    • Cheryl Ganley

      Couldn’t rent control do the same thing without added the fee to lodging?

  • Brian Hanbridge

    Adding $2 to a tourist family’s $200-$400 nightly stay in our state, leading to over $7 million to improve housing for various groups as well as an attempt to improve Lake Champlain water quality, is inappropriate according to our well intentioned Governor. Would it be better to again raise our truck & car inspection fee which now stands at over $60, or related fees particularly impacting working families and small businesses ?

    • Michael Gardner

      you do understand that the State doesn’t get that fee right? That is what the service stations charge. The state gets $3.95

    • Cheryl Ganley

      The current governors office had nothing to do with the new inspection and/or costs. This was implemented by DMV Commissionerthe Robert D. Ide under the Shumlin administration.

  • Mary Alice Bisbee

    it seems to me that even Governor Scott should be able to listen to reason when it comes to a $2 per night occupancy tax for hotels, motels and B&B’s. Naysayers are noting that this will cut into wedding business and tourism in general. If anyone wants to stay overnight in a hotel, they most likely have the wherewithal to pay for it! Most Vermonters do not!
    As a supporter of Vermont Interfaith Action (VIA) who has been supporting this occupancy fee bill since the beginning of the session, it is heartening to know that our state senators actually are listening to us, their constituents, and not just the well paid lobbyists of industry.
    This bill is about compassion for those who have fallen through the cracks. Much of this money is to be spent on additional support services for those overcoming sexual, alcohol and drug abuse. These are the folks who end up in the Emergency Room, or dead under bridges, homeless with no family supports. More permanent housing, not just shelters, is what is needed now. It will require compassion from all sectors. Let’s hope that the rest of the legislature and Governor Scott are listening…
    And although Lake Champlain also will need funds, these dollars should not be split with that important cause.

  • James Hall

    I hope Gov Scott sticks to his original statement : No New Taxes!!!!!! There seems to be a preponderance of thinking in the state that we have a spending problem, not a revenue problem. Spending only begets more spending, we have long since passed the “never is there enough money” mile-marker, lets start using common sense and VT type judgement ; it is sorely needed here and in DC.

  • Rich Lachapelle

    Every 2 years working, taxpaying Vermonters have the opportunity to vote these tax-and-spend liberal revenue hounds out of Montpelier and every time we return pretty much the same crew to squeeze us some more. The solution is simple: stop voting for demoprogs. The rest of the country except for a few pockets of chronic urban dependency and the Hollywood Left have figured this out and have changed things.
    Stand strong Governor Scott and wave that veto pen like you mean it.

  • Matt Young

    Rich, the problem is the percentage of Vermont voters that recieve some type government compensation, work for the the government, are involved with the big public education monopoly or folks who are pro-regulation anti-everything is a greater than 50%. Unfortunately most Vermont politicians cater to these voters, if they didn’t, they would have no chance of being elected.