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Middlebury local option taxes meet debt target

MIDDLEBURY — Middlebury has netted $641,741 in its first year of levying a local option tax on rooms, meals, sales and alcohol, a sum that is comfortably ahead of the $600,000 needed to meet the community’s first-year debt obligation for the new Cross Street Bridge.
“I think the town should be very happy,” said Joe Colangelo, Middlebury’s assistant town manager. “Thankfully, we’ve made our goal.”
It’s a goal that seemed ominously elusive only nine months ago. Middlebury voters had agreed to institute a local option tax of 1 percent on sales, rooms, meals and alcohol as a means of raising at least $600,000 annually over 30 years to cover Middlebury’s debt obligations on the $16 million Cross Street Bridge project. Middlebury College has pledged an additional $600,000 annually to contribute toward the new span over the Otter Creek that will link Main Street to Court Street via Cross Street.
But the new taxes kicked in just as the state and national economies descended into a major recession. All of a sudden, annual revenues originally projected at $700,000 seemed at risk of coming in at less than the minimum $600,000 needed.
“It just happened to be that when we first implemented this tax, it was the low point of the economy,” Colangelo said.
The first reported yield, for the fourth quarter of 2008, came in at $157,946. That proved unnerving to town officials, as the fourth quarter encompasses the foliage and holiday shopping seasons.
And it’s a picture that didn’t get much brighter for the first quarter of 2009, with local option tax revenues of $131,461.
“There was certainly a time we thought we would see some shortfall, the way the first two quarters were going,” said Middlebury selectboard Chairman John Tenny.
But revenues from the second and third quarters of 2009 came in at $165,417 and $186,917, respectively, producing a first-year total of $641,741 in local option taxes. The latest two quarters included summer and the height of foliage season.
“Obviously, the data is showing that the economy is rebounding,” Colangelo said.
Officials are hoping the rebound continues during this fourth quarter of 2009, which will again reflect holiday shopping.
While the first year’s receipts for the local option tax are $41,741 more than is needed to make the initial debt service payment on the Cross Street Bridge, town officials cannot use that money for other municipal expenses without taxpayers’ permission. Not that it couldn’t come in handy; selectmen on Tuesday began planning a fiscal year 2011 municipal budget that they want to be property tax neutral.
“Personally, I am not eager to be looking to apply that (local option tax surplus) elsewhere, at this point,” Tenny said, adding he believes the money should be reserved as a safety cushion for the bridge project debt.
Better Middlebury Partnership Coordinator Gail Freidin said she’s pleased the town has rounded out the year having met its local option tax revenue goal for the bridge project. While she noted the revenues don’t provide a complete pulse for the economy, Freidin said area merchants are seeing some positive signs.
“What people are telling me is that things aren’t as bad as they thought they’d be,” Freidin said.

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