For new taxes, only room at the inn

Local option taxes met a mostly chilly reception in Bennington, Hinesburg and Essex on Tuesday, with only one — a rooms tax  — passing in a preliminary vote.

“People feel the stress of increased gas prices,” said Ted Brady, executive director of Vermont League of Cities and Towns. “They feel the stress of the cost of inflation, and they seem to have questioned whether adding another percent to their shopping bill would have made sense to them.”

Although all seven proposals were touted as a way to provide property tax relief, town officials and experts said local option taxes faced an uphill climb this November due to high economic pressures for Vermonters. 

The failures do not necessarily signify a trend because local option taxes are typically more successful in Town Meeting Day votes, they added.

The local option tax ballot questions — votes on whether to implement a 1% increase to state taxes on meals, alcoholic beverages, rooms or sales in individual municipalities — failed on all fronts in Bennington and Hinesburg.

In Essex, the rooms tax prevailed with 60% support on a preliminary vote despite controversy after the town failed to notify residents in time for the vote in accordance with state law. The rooms tax in Hinesburg was also the most popular option. It received 46.3% of the vote as opposed to 27.4% for sales and 34.7% for meals and alcohol.

“When we look at it, the rooms tax is one that is clearly for people that are visiting our town,” said Shannon Jackson, chair of the Essex selectboard.

Bennington bundled the three elements of the tax into a single proposal, which failed by a margin of 2,292 to 3,136 on Tuesday.

“Maybe three separate votes might have been the better way to go, I don’t know,” Haley said. “That’s Monday morning quarterbacking at this point, which we’re going to do a lot of.”

Local option taxes met a different fate in the March votes earlier this year. Almost 20 municipalities proposed the tax, and the measures passed fully or partially in all but six municipalities. Brady said Tuesday’s votes do not necessarily indicate a larger trend.

“The economic climate wasn’t that different in March, and several towns passed local option taxes,” Brady said. He said the contrasting results had more to do with the individual town residents and the issues that each town is dealing with. 

The electorate that turns up for the midterm elections also tends to be slightly different than a Town Meeting Day, Brady said.

“I don’t think a lot of people showed up at the midterm elections to vote specifically on the local option tax,” Brady said, “where I think when you get to a Town Meeting ballot, oftentimes that might be the reason you’re showing up. That’s the only controversial thing that’s on the ballot.”

Some controversy surfaced in Bennington in the lead-up to the vote, Haley said, including questions about whether the revenue would just drive up city spending, driven by individuals whom he deemed “keyboard warriors.” But there was also some confusion on how exactly the proposal could benefit Bennington’s residents.

“Any time you hear the word tax, that’s got a negative connotation to a lot of people,” Haley said. “And the idea of using a tax to reduce another tax, I think, is, it’s weird, right?”

The local tax option proposal is tabled for now in Hinesburg, according to Todd Odit, Hinesburg’s town manager. It is too early to say how the selectboard will proceed in Bennington, Haley added. Essex will take a final vote on the rooms tax on March 2, 2027, which will be binding.

The recent election results encouraged Jackson, since the rooms tax didn’t pass on a “razor-thin margin.”

“They did want a very clear victory margin for the rooms,” Jackson said.

Read the story on VTDigger here: For new taxes, only room at the inn.