VERGENNES — The Vergennes City Council at its Tuesday meeting last week agreed to Mayor Michael Daniels’ suggestion to look at the idea of adopting local option taxes in the city.
Local option taxes piggyback on state sales-and-use or rooms-and-meals taxes by adding 1 percent for local revenue to either or both. Daniels said a study conducted a number of years ago, when the city briefly considered the idea, showed that such a tax could raise $100,000 a year for Vergennes.
Daniels said that money, rather than on-budget property tax revenue, could be used to fund specific projects called for in the recently adopted Downtown/Basin Master Plan — projects for which there are no funding sources other than hoped-for grants.
Many of the projects were also discussed during the 2014 Vermont Council on Rural Development Community Visit, and the local option tax was also raised then as a possibility then as a way to fund them.
Daniels called the proposed work “big-ticket items that need to be addressed,” such as improvements to Otter Creek basin recreation facilities and to the downtown, including traffic-calming measures. He said he wanted feedback from the council on whether to study local option taxes.
“I’m looking to the city council for guidance,” he said.
City Manager Mel Hawley said adoption of a local adoption tax could only be done with voter approval of a charter change, and then approval by the Legislature of that change.
Alderman Renny Perry noted that the idea had not gotten far when raised before because of the recession and opposition from the business community, in part because few other communities had adopted such taxes.
Now, Perry said, because more towns have local option taxes in place, including Middlebury, Williston, and, most recently, Colchester, business and restaurant owners could be more receptive.
“Now we’re surrounded by them,” Perry said. “Maybe we should look at it again.”
Perry added the actual impact on residents and businesses would not be great, although he understood the emotional issue of taxation.
“The 1 percent really is minuscule,” he said. “They wouldn’t notice it if you didn’t tell them if it was there.”
After Daniels responded he wouldn’t want to do anything that would “drive businesses out of town,” Alderman Matt Chabot said the council should at least put out feelers to the city’s commercial sector.
“We need to get feedback from the business leaders in the community,” Chabot said.
Aldermen reached consensus to take that step, particularly in reaching out to Country Home Products and United Technologies Corp.
“I’d like more information,” said Alderman Jeff Fritz.