Vermont Weighs Hotel Room Tax

Published: 4/13/2018 12:11:46 AM
Modified: 4/13/2018 12:11:54 AM

Montpelier — Rep. David Deen, D-Putney, on Wednesday proposed a $2 tax on hotel rooms as a way of generating money to help defray the estimated $25 million annual cost of reducing phosphorus pollution that is fueling toxic algae blooms in Vermont lakes.

Deen, the chairman of the House Committee on Natural Resources, Fish and Wildlife, surprised a roomful of onlookers on Wednesday morning by announcing the proposed tax, which would take effect in 2020.

He added the tax to S.260, a Senate bill that forms a study committee that would recommend a funding source for reducing water pollution.

Gov. Phil Scott has said, without detailing how, that one of the study groups, members of which would include executive branch appointees, may violate the separation of powers clause of the state’s Constitution.

Scott’s position was echoed, without a detailed explanation, by Susanne Young, the secretary of the Agency of Administration, in testimony to Deen’s committee last week.

Michael O’Grady, one of the Legislature’s in-house attorneys, said there is no separation of powers issue.

“The secretary of the administration said the other day that … (S.260) encroaches on the governor’s authority to appropriate,” O’Grady told Deen’s committee. “The governor doesn’t have authority to appropriate.”

The state Legislature has the authority to appropriate, under the Vermont Constitution, he said.

Rebecca Kelley, the governor’s spokeswoman, did not respond on Wednesday to a request for comment.

Deen’s version of S.260 requires members of the executive branch to participate in a study group. But the group would have two years to come up with an alternative to a tax on room rentals.

“If this working group does not have a specific suggestion, or the Legislature rejects (the bill) and doesn’t move forward, then by default, Jan. 1, 2020, a per-room, $2 charge per night goes into effect,” Deen said. “It says, ‘This is what we’re going to do; if you have a better idea, you have two years to bring it to us.’ ”

This approach could provide political cover for Scott, who has made it his mantra not to impose new taxes or fees at least until his second term in office.

Treasurer Beth Pearce recently testified to the House Committee on Natural Resources, Fish and Wildlife that lawmakers should move quickly to raise revenues for pollution abatement.

“We do not need to do another study” in order to figure out a long-term funding source to cut the state’s water pollution, Pearce said last week. “You’ve got the information to do it now. Let’s do it now.”

The $2 per night, per room tax proposed on Wednesday would raise about $7.4 million annually, Deen said.

Pearce has estimated that the state will need $25 million in annual revenue to bring Vermont into compliance with state and federal clean water standards over the next 20 years. Members of Deen’s committee asked whether a $2 per room, per night fee would be sufficient.

Rep. Carol Ode, D-Burlington, asked why not set the fee at $5 per room per night, and raise about $18 million per year — a sum much closer to what the state is likely to require each year.

Deen said he regarded the amount proposed, and the specific type of fee, as politically palatable. He said a similar fee originally was proposed in Act 64, Vermont’s Clean Water Law, which passed in 2015.

The committee is expected to vote on the bill today.

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