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1% Local Option Tax FAQS

1% Local Option Tax FAQS

 

 

1. What is an option tax?

The 1% Local Option Tax is a way for municipalities in Vermont to raise additional revenue. A municipality may vote to levy 1% local option taxes in addition to state business taxes in the following ways: sales tax, meals tax, alcoholic beverages tax, and rooms tax.

Source: Vermont Department of Taxes: http://tax.vermont.gov/business-and-corp/sales-and-use-tax/local-option-tax

The 1% Local Option Tax implemented by the Killington community in 2008 has two parts:

meals & rooms and sales & use, and adds a 1% fee to all purchases in those areas.

The Meals & Rooms 1% Option Tax, which includes lodging, dining and beverage purchases, is passed along to and paid for by the consumer, not impacting business revenue.

 

The Sales & Use 1% Option Tax, which includes utility bills, retail purchases, and various other purchases, in many cases is also passed along to and paid for by the consumer.   However in the case of lift tickets, tax is included in the published price, making the Resort responsible for paying the 1% Sales Option Tax, and directly impacting revenue.

 

Local Option Sales Tax - 6% sales tax + 1% = 7% total tax

Local Option Meals Tax - 9% meals tax + 1% = 10% total tax

Local Option Alcoholic Beverages Tax - 10% alcohol tax + 1% = 11% total tax

Local Option Rooms Tax - 9% rooms tax + 1% = 10% total tax

 

 

 

 

2. How is the tax collected and returned to the town?

(a)  The tax is collected from businesses as an add on to a guests check or allocated out of a business’s revenue.

(b)  1% local option tax is paid direct to the State of VT

(c) The State of VT keeps 30% and pays back 70% to the Town of Killington.  The average annual revenue of both taxes since inception is $1.095 M of which only 70% is returned to the town of Killington and on average the state keeps $329k annually.

(d)  The Town of Killington Select Board determines how the tax money is spent in a town budget that is approved by the residents.

(e)  The 1% local option tax returned to the town of Killington was allocated 100% for economic development and growing summer.  Currently only 35% of the current town budget is being allocated toward special events and marketing with the other 65% allocated to partially pay down Green Mountain National Golf Course debt, and additional town expenses in an effort to stabilize property taxes.

 

 

 

3. What has the resort done to grow summer?

Repealing the 1% sales and use portion of the local option tax was originally proposed back in 2014, but was tabled so voters here in town could see if the resort followed through on plans to expand summer business, add events and build new four-season infrastructure.

 

Since then, Killington Resort has invested over $5 million into summer and four-season assets ranging from mountain bike trails to the Beast Mountain Coaster, zip lines and helping to build out a summer events schedule so there’s something fun happening in town almost every weekend of the summer and fall.

Accordingly, as summer business in the community steadily increased each summer, the 1% rooms and meals tax fund has grown significantly from its original value, by over 55% ($21k) from 2013-2016 after the resorts major investment in summer assets along with efforts of the Killington Pico Areas Association events schedule.

 

Killington Resort continues to be the largest contributor of 1% Local Option Tax revenue in all four seasons.

 

 

 

4. If the tax is repealed who will invest in summer economic growth?

For Killington Resort, this tax is included in lift ticket purchases; if the tax is repealed the much of the savings to the resort will be reinvested into the many events hosted through the KPAA, with the remainder invested back into resort summer asset growth.  This will drive more revenue to the entire Killington business community while eliminating the burden on the Town of Killington to invest in summer events and marketing.  The resort will work closely and appropriate a portion of funds to the Killington Pico Areas Association (KPAA) with the goal to continue the many successful events that have been brought to the region and help the entire community grow.

 

 

 

5. If the tax is repealed, will my taxes increase?

The KPAA believes the town budget once relieved of all marketing and event expenditures could be balanced without a tax increase or at a minimum a very small tax increase amounting to less than the estimated savings from residents and business owners not having to pay the 1% local option sales and use tax on eligible purchases.

Financial Impacts: Killington Town Budget

 

Sales & Use Options Tax Revenue – 9 Year Average

$415,000

Economic Development Savings

(Reduction of Special Events, Marketing-$280K, and golf course debt payment expense-$160K**)

($440,000)

Net Impact on Town Budget

($25,000)*

* Rescinding the Sales Option Tax could very likely have a positive revenue impact to the Town of Killington

**The Town of Killington’s golf course debt payments will be reduced by -$160K in FY2018, which has essentially been funded from the local 1% Options Tax.  The Rooms and Meals/Alcohol portion of the 1% Option Tax will remain in place, and continue to help fund the balance of golf course debt.

 

 

 

 

6. What would happen to the EDTC?

The Economic Development & Tourism Commission would end up dissolving if the 1% sales and use tax were repealed.  The rooms and meals local option tax revenues to the town would continue to be part of the town’s general fund and will likely continue to grow as it has year over year since summer investments began.  The resort and KPAA will take over and pay for these marketing and event expenditures, leaving no gaps in summer programming.

 

 

 

 

7. I am a town resident but not registered to vote, how do I register?

You can register by

You must be a Vermont resident in order to register to vote.

 

 

 

8. When is town meeting day?

Annual School District Meeting and Informational meeting for town meeting articles at the Killington Elementary School, 4:30 pm on Monday, March 6.  There will be a Pasta Dinner served at 5:30 pm as a fundraiser for the United Church of Christ.  All are welcome!   In preparation for Town Meeting Australian Ballot Voting there will be an informational meeting at the Killington Elementary School at 7:00 pm Monday, March 6.

Town meeting day is March 7, 2017 – polls open 7am and close at 7pm at 2706 River Rd, Killington, VT 05751

 

 

 

9. I will not be able to vote on March 7th are absentee ballots available?

Yes, they are available and you can request one by

Calling 802-422-3243 or emailing lucrecia@town.killington.vt.us ASAP for a mailed ballot

Visit the town office between now and 3pm on March 6 and vote via absentee ballot in-person

 

 

Timeline Summary

2008

1% Local option tax voted in by the Killington community to grow economic development in the summer months through events and marketing.

See Q&A #1 & 2 for additional information

2011

A portion of the 1% Local option tax voted to be moved into the general fund to help pay for Green Mountain National Golf Course debt and alleviate residents from a tax rate increase.

 

[In 2011, the year that marked our 250th anniversary, our Town continued to make history. At our first Town Meeting, residents voted to change the way they participate in government, choosing to adopt Australian ballot voting. Next, feeling the pressure of other financial obligations, voters elected to direct Options Tax revenues into the General Fund rather than exclusively support economic development. Finally, residents asked the new Selectboard to go to work immediately when they requested a second budget proposal and a second Town Meeting in the spring.] – Source 2011 Annual Town Report]

Fall 2014

Killington Resort proposed to repeal the sales and use portion of the 1% local option tax in order to better utilize our tax contribution to help grow summer assets and economic growth in the region, putting the funds back where they were originally intended.

Winter 2014/2015

Killington Resort decided to not move forward on the sales and use repeal due to resident feedback that they wanted the resort to prove they were committed to grow summer….they did!

January 10, 2017

Selectboard supports $100,000 contribution to the World Cup and includes this as part of the FYE 2018 budget. Several town residents suggest that the town reconsider rescinding the sales and use portion of the 1% local options tax.

In 2016 4th quarter (Oct.-Dec.) rooms and meals receipts to the town grew 32% ($22K) from the previous 3-year average for the same period.  Much of this growth can be attributed to the hosting of the World Cup.  Everyone had success with this event including the Town of Killington

 

See Q&A with Mike Solimano in the Mountain Times for more info

January 17, 2017

Selectboard approved a vote to rescind the sales and use portion of the 1% local options tax for the March vote.  If rescinded this will take effect in FY2019 (July 1, 2018)

March 6, 2017

Annual School District Meeting and Informational meeting for town meeting articles at the Killington Elementary School, 4:30 pm.

Pasta Dinner served at 5:30 pm as a fundraiser for the United Church of Christ.

Informational meeting at the Killington Elementary School at 7:00 pm.

March 7, 2017

Voting Day

Vote Yes, to Article 4.  “Shall the one percent local options sales tax be rescinded effective July 1, 2018?”

 

 

MOUNTAIN TIMES LINKS

2/22 Killington keeps getting better by Nate Freund

http://mountaintimes.info/%ef%bb%bfkillington-keeps-getting-better/

2/22 Supporting the World Cup by Chris Karr

http://mountaintimes.info/supporting-world-cup/

2/15 Fact checking important details of the 1 percent local option sales tax repeal by Mike Solimano

http://mountaintimes.info/fact-checking-important-details-1/

2/15 Option tax needs revision by Chris Karr

http://mountaintimes.info/options-tax-needs-revision/

02/01 Q&A with Mike Solimano

http://mountaintimes.info/qa-mike-solimano-5/

01/26 Resort’s request supported by Mitchell Broder

http://mountaintimes.info/resorts-request-supported/

01/11 Killington Resort: Building on our success by Mike Solimano

http://mountaintimes.info/killington-resort-building-success/

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