Inflation, population growth, tourism and a reduction in emergency management volunteers are putting pressures on Stowe’s town budget.
To alleviate those pressures, Tuesday’s Town Meeting voters will consider imposing a 1% local sales tax. The town’s finance director, Cindy Fuller, predicted that could bring in at least an additional $700,000 a year, which the town would use to mitigate an increase in property taxes.
Stowe already has local taxes on meals, alcohol and rooms in its restaurants, hotels and short-term rentals. Those levies brought in $1.5 million in the past fiscal year. Fuller said that money goes into the town’s capital budget and is used for new infrastructure projects, to pay the debt for building the Stowe Arena and for a recent underground utility project on Main Street, or Route 100.
Stowe is one of five towns — along with Jamaica, Londonderry, Rutland City and Shelburne — considering adding local taxes on sales to the 1% tax it already applies to meals, alcohol and lodging.
Forty-four municipalities already charge a sales, meals, alcohol or lodging tax, or some combination of them. In fiscal year 2022, these towns collected a total of $39.91 million in local option taxes.
Businesses collect the taxes and remit them to the state Department of Taxes, which returns 70% of the money to the town. The other 30%, minus a $5.96 fee on each tax return, is put into a fund for payments in lieu of taxes, compensating municipalities for taxes they are not allowed to collect on state-owned property.
Two cities, Burlington and Rutland, do not go through the state tax department but instead administer their own local option taxes.
Rutland already charges rooms and meals taxes of 1%. City voters will decide Tuesday if they want to add a 1% sales tax. The city takes in about $500,000 with the taxes, according to Mayor David Allaire. The money goes into the city’s general fund, he said.
Allaire said the city could raise another $1 million to $1.2 million a year with a 1% sales tax. He said part of the money would go to upgrading city buildings.
“We own a lot of property,” Allaire said. “It’s all getting older. There’s some significant work that needs to be done.”
Some of the money will address a deficit in the city’s pension fund, he said.
“We have been addressing that recently but just not enough to keep up with the number of people that are retiring,” Allaire said.
Some funds will go toward mitigating property tax increases, he said.
Jamaica does not have a local option tax, but it is proposing three to voters on Tuesday: a 1% tax each on sales, meals and alcohol, and lodging.
Greg Meulemans, chair of the Jamaica Selectboard, said the town, which has more than 1,000 residents, hopes to generate $30,000 a year from the sales tax and $25,000 from the rooms and meals taxes. He said the money would go to the general fund.
Meulemans predicted the taxes targeting tourists might have a better chance of passage.
“Of course it’s hard telling, but I feel that the sales tax portion might be less likely to be approved because of its more direct impact on the local population,” he said.
