Sen. Michael Sirotkin, D-Chittenden, said he would introduce an amendment on the Senate floor this week on the miscellaneous tax bill, H.516, that would impose a 35-cent nightly fee on stays in hotels and motels.
Sirotkin is offering the occupancy fee despite repeated threats from Scott that he would veto any budget that raises taxes or fees. The fee would raise $1.3 million a year, Sirotkin said, and 90 percent of that money would come from out-of-state residents.
“I feel that we’re working in a box here of absolutely no fees, no taxes, but there comes a point where there has to be some degree of flexibility and we don’t shoot a bad idea in the foot because of a rigid principle,” Sirotkin told Senate Democrats on Tuesday.
“I don’t need to offer this if there’s another solution, but I haven’t seen another solution,” Sirotkin said. He said Senate leadership has not yet heard an alternative funding proposal for the $35 million housing bond from the Scott administration after lawmakers declined to adopt the governor’s plan.
Sirotkin said several senators have asked to sign on as sponsors to the amendment.
Scott proposed the bond, which would cost $2.5 million a year, in his original budget. The type of borrowing is called a revenue bond, meaning the Legislature needs to commit a specific revenue source for the entire 20-year term of the bond.
The governor proposed having the first $1.5 million a year in debt payments come out of property transfer tax revenue that already would have gone to the housing board, and then committing an additional $1 million a year from the same property transfer tax.
The House cut that $1 million from its original budget. The Senate Finance Committee then proposed funding the entire annual $2.5 million bond cost through a $2-a-night occupancy fee. The Senate Appropriations Committee abandoned both the fee and Scott’s requested $1 million in funding in the budget it passed Friday.
“There’s no question there’s been broad support for the expenditure of the housing bond,” Senate President Pro Tempore Tim Ashe, D/P-Chittenden, told the Senate Democratic caucus. “Every one of our communities has issues of supply of housing and affordability levels.”
“The issue has been making sure that we have a sort of wise way to pay for it, and the proposal that came in the governor’s budget came at the expense of other general fund expenditures, so we’ve been trying to work with the administration on a self-financing proposal,” Ashe said.
“The long and the short of it is that from a leadership point of view, we’re keeping the discussion alive because we know how much of a priority it is,” Ashe said. “I don’t think at this moment there is a construct yet” to pay for the bond.
Sen. Bobby Starr, D-Essex-Orleans, asked Ashe and Sirotkin: “Did you go to the governor and ask where he would recommend getting the money from? You know, he’s the one who proposed it.”
Starr continued, “I understand he wasn’t too complimentary on (the budget approved by Senate Appropriations), so I would recommend that maybe if you want to really do this, maybe go have a visit with him.”
Sirotkin replied: “I think he’s well aware of the Senate and the General Assembly’s position on this, and this is at a very low price to break the logjam, and we’ll see what he says.”
Sen. Mark MacDonald, D-Orange, said it might be easier to raise the rooms and meals tax, which is 9 percent. The Tax Department testified in March that raising $2.5 million would require a 1.1 percentage point increase in the rooms and meals tax.
“You have to set up a bureaucracy to apply (the occupancy fee) and collect it that does not exist, and in the end it’s not as progressive as raising revenue by raising the rooms tax is,” MacDonald said.
Sirotkin said in an interview that he is open to raising the rooms and meals tax. He said the difference is that the rooms and meals tax goes to the state’s general budget, while an occupancy fee would be a dedicated source of revenue.
He said he is not trying to go against the governor.
“I’m trying to go for the people,” he said. “It’s the governor’s idea. It’s a great investment, and it comes at a very small price.”
Sen. Ann Cummings, D-Washington, the chair of the Senate Finance Committee, supports Sirotkin’s proposal. She also said the Legislature might need to consider raising the rooms and meals tax.
“We’re looking for a way to fund this that doesn’t take it out of already hurting programs,” Cummings said. “I don’t think there’s a program in the state right now that is adequately funded.”
Cummings also said she is not concerned about going against the governor.
“The governor proposes his ideas,” she said. “The job of the Legislature is to look at them and to make decisions about what we think is the best course for the people of Vermont. We have checks and balances.”
Cummings added: “My job is not to do what the governor asks for.”
H.516 will be debated on the Senate floor later this week.
