The city council has approved a city charter change, paving the way for a Town Meeting vote on an additional 1 percent option tax on rooms, sales, meals, and alcoholic beverages. Another amendment in the charter approved by the council would levy a 0.5 percent tax on short term rental cars.
Representatives from two rental car organizations appeared before the city council on Jan. 22 to voice their opposition for plans to tax short…
Vice-chair Meaghan Emery ran the Jan. 22 meeting, as Chair Helen Riehle was out of town, and the vote was 3-1, with Councilor Tom Chittenden dissenting.
Proceeds from the option tax would be used to fund voter-approved capital projects in the city, specifically a proposed indoor recreational facility planned next to Cairns Arena, a proposed performing arts center in City Center, the location yet to be determined, and a pedestrian/bike bridge over Interstate 89 to Dorset Street.
City Manager Kevin Dorn and his staff presented the idea of an option tax to raise money for the multi-million projects rather than increase the property tax rate, since local schools rely on property taxes for funding.
But if approved, the 1 percent option tax will raise South Burlington’s sales tax to 8 percent, the highest in the state, a fact that Chittenden said was a deal breaker for him. Burlington’s sales tax is currently 7 percent, although the Burlington rooms and meals tax is 8 percent. He read a prepared statement at the Jan. 22 meeting, saying that while he does support an increase to the rooms and meals tax, he could not support an increase in sales tax.
“God willing, I am going to be living in South Burlington for at least another 25 years and as a resident and City Councilor, I do NOT want to pay another 1 percent on everything I buy here nor do I want to build a $30 million facility to compete with Memorial Auditorium, two miles down the road,” Chittenden said. “Burlington gets more in local sales option taxes and owns a perfectly -sized facility and land for this cultural need — I encourage the proponents of this facility to press for a performing arts space in the revitalized Memorial Auditorium and I encourage this council to not make South Burlington the highest-taxed city in the state.”
Tourism and turnout
The first of two required public hearings on the charter change was held on Jan. 28, but only two people attended from the public. Karen Wisehart, director of marketing for the Windjammer Hospitality Group, was one of them. The Windjammer Inn and Conference Center, and the Upper Deck Pub, are located on Williston Road in South Burlington for the last 40 years.
“I think we would be more supportive of something that would drive tourism to come to South Burlington,” she told the council. “The option tax would be a little less scary if we knew it was for something that would drive tourism.”
That said, CCTV cable access live streamed the hearing on Facebook.
The low turnout prompted Barritt to say he was concerned about having a March 5 Town Meeting Day vote on an option tax.
“Putting this up to the taxpayers is the best way to go,” he said. “My fear is that March is not the best time to vote on something like this. People with special interests tend to come out and sway the vote, so we might not see a fair representation of voters, and unfortunately, there aren’t a lot of people here, so they either don’t know or they don’t care. Either way, we’ll find out in March.”
With voter approval, the charter change would then have to go to the Legislature for approval before it could be implemented. The state collects 30 percent of any option tax adopted in a Vermont municipality, and the municipality keeps 70 percent. The change would also have to be signed by the Governor.
Emery disagreed with Chittenden’s assertion that the economy was not within the council’s responsibility.
“I think the economy is part of our purview,” she said. “When I go the Flynn (Center for the Performing Arts in Burlington), I don’t just go to the Flynn. I go to dinner, I may shop to kill time. It draws people in and contributes to the economy.
“I’m not here to jam it down anyone’s throat,” Emery added, “but I do think it needs to go to the voters.”
Councilor Time Barritt agreed.
“An indoor recreation center is something that the city is really interested in building, so that’s a great asset to have,” he said. “The arts center less so, but it is an economic attraction.”
All on board?
Barritt added that South Burlington is one of four Vermont municipalities considering an option tax, including Williston and Colchester.
At the Jan. 28 public hearing, Emery echoed Barritt’s assertion.
“I was originally against (the option tax),”she said, “but then a legislator told me that, indeed, there were other towns doing the same thing.”
To Chittenden’s assertion that Memorial Auditorium would be a better option for renovation and expansion regarding an arts center, Kaufman was blunt, referring to the long-vacant Moran electrical plant on the Burlington waterfront.
“We can’t look to Burlington to see what they do with Memorial Auditorium,” he said. “If they’re as indecisive as they’ve been with the Moran Plant, it’s not going anywhere. There’s no harm in asking the voters if they like the idea (of an option tax).
After more discussion before the vote, the council turned to Dorn for his view on the issue.
“I would argue that these two projects and the bridge will economically benefit this city and keep our young people here,” he said. “So, in order not to be stagnant, you have to provide what the public wants as far as amenities.”
In the end, Article III on the city charter amendment reads as follows:
Limited purposes sales, rooms, meals, and alcoholic beverages tax
(a) Only after voter approval for financing of one or more specific capital projects within the city:
The City Council may assess an up to one percent tax, in addition to the rates authorized under the local option tax in section 13-1506 of this chapter, on those transactions in the city subject to sales, rooms, meals, and alcoholic beverages which are subject to taxation by the state of Vermont. The authority of the City Council to impose said tax was approved by the voters on March 5, 2019. Imposition of this tax shall be in accordance with the requirements of sections 138(c) and (d) of Title 24.
(b) All tax revenue from this additional source received by the city shall be used to:
(1) Service and retire any debt incurred for financing specific capital projects approved by the voters by July 1, 2029.
(2) Fund a capital reserve fund for voter-approved city projects under (c)(1) of this section, in an amount not to exceed 10 percent of the total voter-approved debt incurred for the specific capital project.
(c) The authority of the City Council to assess this tax shall cease after all outstanding debt and capital reserve funding identified in subsection (b) has been retired and fully funded.
(d) For purposes of this section, “voter-approved capital project” shall mean voter-approved debt for the construction or improvement of municipal facilities and infrastructure that are intended to encourage economic growth and quality of life in the city and region, such as, an indoor recreation facility, performing arts center, bicycle and pedestrian infrastructure, or a mixed-use arena facility.
Assistant City Manager Tom Hubbard said on Tuesday morning that the Town Meeting vote on the charter change is the next step in getting the charter change approved by the Legislature. He said it does not mean that the option tax, if approved, would be 1 percent on all sales, rooms, meals, and alcohol.
“If we do get the option tax granted, we could go back to the voters and says, ‘These are the options, just rooms and meals, or just sales,’” Hubbard said. “There’s more of a choice depending on what the impact would be. The vote in March is just authorizing us to go to the Legislature and says, ‘We have options for granting future projects in the city.’”