Tuesday January 29, 2013

NEAL P. GOSWAMI

Staff Writer

BENNINGTON -- The Select Board agreed Monday to support legislation introduced in the Vermont Senate that would allow the town to raise about $1 million annually through a local 1 percent sales tax.

Bennington Town Manager Stuart A. Hurd said he has spoken with legislators several times in the last five years about a local sales tax in Bennington. The town could benefit from a 1 percent sales tax that is currently limited to a small portion of municipalities.

"I'm not really interested in the rooms and meals because I think that in Bennington that's not really a big deal, and probably just a hardship on our motel and hotel owners," he said. "But the sales tax, we have a lot of people who come in to our area for shopping."

Hurd said the additional revenue could help reduce the local property tax burden and help complete additional infrastructure work. According to Hurd, $136 million was collected by the state in sales tax in Bennington alone. A 1 percent local option sales tax would generate an additional $1.36 million in revenue for Bennington, of which $952,000 would go to the town.

Democratic Bennington County Sens. Dick Sears and Robert Hartwell have sponsored a bill, S.39, that would allow all municipalities the option of having a local sales tax. Current law only allows municipalities that are "sending" towns under the state's Act 60 education funding mechanism to assess the tax.

Sears, a former member of the Bennington Select Board, said he has been trying to garner support for expanding the local option sales tax since he was first elected to the Legislature about 20 years ago.

"This is the kind of thing that gives small towns like Bennington an opportunity to help raise some of the costs of being the central town in the area," he said.

But some towns on the eastern side of the state have consistently voiced strong opposition to the local sales tax because stores must compete with sales tax-free New Hampshire. Sears said voters in each town must approve a local tax, however, and no town would be required to pass it.

Expanding the local option sales tax would boost funding for the state's Payment in Lieu of Taxes program, too, since 30 percent of the revenue raised by municipalities would go to that program. The program provides cities and towns with some payments for state-owned land that is exempt from local property taxes.

"The more communities that are in the local option tax the more money that will be collected for the program," Sears said. "It has a benefit to everybody, and it is a local option."

Hurd said the town is receiving $190,000 this year from the PILOT program for state property in Bennington. "The complaint by those of us who have a lot of state property is the state has never really fully funded the PILOT program. We're always getting shorted a bit," he said.

The bill has been assigned to the Senate Finance Committee, of which Hartwell is a member. Sears said he has spoken with the committee's chairman, Sen. Tim Ashe, D-Burlington, D-Burlington, who is "amenable to it."

Even if the legislation allowing the local option sales tax expansion is successful, voters in Bennington would have to approve it by a majority vote.

Neal P. Goswami may be reached at ngoswami@benningtonbanner.com. Follow him on Twitter @NealGoswami