Feedback mixed on Middlebury local option tax proposal

MIDDLEBURY — Middlebury selectmen on Thursday made the first of what will be several pitches to the community for local option taxes to partially fund a new in-town bridge, and they learned that not everyone is sold on the idea.
“My concern is that once a tax like this is added, it never goes away,” said Scott Jacobs, owner of the Agway Farm & Garden Store, who said he would prefer selectmen find another funding mechanism for what he said was a worthwhile in-town bridge project.
“An extra sales tax isn’t going to bring in more business,” he added.
Thursday’s hearing drew around 30 local residents, retailers and public officials, some of whom weighed in on the notion of levying the local sales, meals, rooms and alcohol taxes by 1 percent each, to raise upwards of $725,000 annually. That money — along with a commitment of $600,000 per year from Middlebury College — would be applied to debt service on a 30-year, $16 million bond issue to fund a new in-town bridge. The bridge would link Main Street with Court Street across the Otter Creek, via Cross Street.
Selectman Dean George, leader of Middlebury’s bridge committee, said local option taxes are a way to generate revenues without increasing the town’s property tax rate.
“We’re very cognizant of the property tax burden and didn’t want this project to be a burden,” George said.
Selectman Victor Nuovo estimated the town would have to add as many as nine cents onto its property tax rate in order to cover the $725,000 that could be raised through local option taxes.
Local option taxes would also capture revenues from non-residents who purchase goods and services in Middlebury and who contribute to the wear-and-tear on the community’s roads and bridges, Middlebury selectboard Chairman John Tenny noted.
“We feel it is fair and appropriate that those folks share in the needed infrastructure to serve that (shopping and lodging) activity,” Tenny said, adding that recent studies have shown that out-of-towners account for two-thirds of the sales recorded in Middlebury each year.
Selectmen stressed voters will get two chances to vote on the local options tax issue.
First, on Town Meeting Day residents will be asked to direct the Vermont Legislature to amend Middlebury’s town charter to give the community the ability to institute local option taxes.
If the Legislature makes the charter change, selectmen would come back to the voters later this year with a specific local options tax request.
George said communities like Rutland, South Burlington, Burlington, Williston, Manchester and Stratton have already implemented local option taxes. Under state rules, those communities get to keep 70 percent of the local option taxes they raise; the remaining 30 percent is used by the state for payments in lieu of taxes to communities that host state property.
Jacobs argued the towns that currently have local option taxes either have larger retail hubs than Middlebury, or are specific destination points for skiers.
“The environment (in Middlebury) is different,” Jacobs said.
He added a town could gain a reputation as being greedy or opportunistic by implementing an extra tax on goods and services.
“I think it’s a rather dubious list we would be adding our town’s name to,” Jacobs said.
Other residents voiced concern about whether Middlebury could sustain local option tax revenues in the long-term, given the ups and downs of the economy. They also voiced concern that the new taxes should expire when the bridge is paid off.
“If we could limit this to the bridge, that would be an important thing to do,” said resident Susan DeWind.
“It’s a road I think that once you go down, you’ll never come back on,” Jacobs said.
Selectmen said language about the duration and purpose of the special levy could be included within the specific local option taxes referendum voters would field later this year.
Tenny added recent history has shown that Middlebury sales tax revenues have risen steadily this decade. He pointed to figures showing retail sales grew by 16 percent in Middlebury between 2001 and 2006, indicating there is probably little chance the local option taxes would crash and require the town to frantically fill the gap with other revenues.
“There’s a clear history of annual growth,” Tenny said.
Middlebury Business Association Coordinator Gail Freidin said her organization’s membership supports the proposed charter change, but has not come to a position on what — if any — local option taxes to support.
Resident Anne Hoover recalled previous local benefactors Joseph Battell and Col. Silas Ilsley, who stepped forward years ago to pay for a major bridge and library, respectively. She said it is now up to the town, with college support in hand, to begin a new chapter of improvements.
“Things have changed, and now it’s up to us to find the money to make these improvements,” Hoover said.
Resident Roger Desautels reminded selectmen that local merchants could experience some setbacks not only during construction of the new bridge, but when the state of Vermont rehabs the railroad overpasses on Merchants Row and Main Street. The state has tentatively agreed to postpone that work until after an in-town bridge is built.
“How many members of our fragile retail environment downtown are going to be able to survive that much negative (activity) for shoppers downtown?” he said.
Selectmen will soon schedule another hearing on the local option taxes proposal. That hearing is likely to include testimony from officials in towns that have already adopted local option taxes.

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