Town of Colchester
Building and Paying for a Sustainable Future
Public Hearings on Local Option Tax Proposal
Tuesday, January 13, 2015
Tuesday, January 27, 2015
7:30 p.m. at Town Meeting Hall
830 Main Street, Colchester Village
The Town of Colchester Selectboard and Administration are committed to finding ways to reduce your tax bill and identifying sustainable ways to pay for needed infrastructure. Therefore, the Selectboard needs your thoughts about a possible Local Option Tax in Colchester which is a funding source used by other communities in the region and statewide. A survey in March of 2014 revealed that 72 % of the respondents supported the creation of a Local Options Tax, (LOT). After tax rate relief, the citizens identified infrastructure investments such as transportation, sewers, and storm water infrastructure as their top priorities. We will be holding two public hearings in January before a decision is made whether or not to advance the issue to a vote by Australian ballot at the March town meeting.
Why is a LOT being considered by the Select Board?
- To lower taxes and reduce debt
- To generate revenues from property owners outside of Colchester to meet unfunded infrastructure needs
The possible uses of a LOT that are being considered include:
- Reduction of taxes (5 % reduction)
- To pay off the Town’s debt (FY 16 cost is $671,648, overall debt is $6.5 million as previously approved by voters)
- To pay for costly unfunded infrastructure needs such as water quality projects and initiatives to encourage responsible and sustainable economic growth (subject to voter approval)
What would be the benefits of a LOT?
- Tax rate relief for all properties in Colchester
- Retirement of Town debt
- Increased infrastructure investment
- Responsible and sustainable economic growth
Who Pays the LOT? It is estimated that 87% of the LOT would be paid by non-residents.
What impact would a LOT have on the average property owner? We estimate that the average Colchester household would pay $10.22 per year of the LOT while saving approximately $82 in municipal property taxes for a net savings of $72 per year.
Won’t a new tax simply be used by the Selectboard to spend more? No. LOT funds would be restricted to retiring current debt and to fund only those future capital expenses as approved by voters.
How much money will the LOT generate? The LOT is estimated to generate approximately $1.29 Million per year.
What is exempt from the Local Option Tax?
- Food products and beverages for off-premise consumption
- Clothes and shoes
- Drugs, medical supplies, durable medical equipment, mobility enhancing equipment, prosthetic devices
- Motor vehicles and fuels
- Agricultural supplies, fuel and electricity
- Residential heating fuel & electricity
- Items taxed by other laws
What is the question to be voted upon?
Shall the Town of Colchester amend its Charter to add Section 703, to allow the annual assessment of a one-percent (1%) Local Option sales, rooms, meals, and alcoholic beverages tax, the proceeds of which shall be used to pay general fund debt on voter approved bonds or notes of the Town, effective 7/1/15, pending approval of the Charter change by the Legislature?
There will also be more specific language relating to the charter language that would carry out the above. Additional information and the specific language can be found at: http://www.colchestervt.gov/Manager/LocalOptionTax.shtml The above language may change subject to public input and legal advice, but will be presented to voters 30-40 days before a possible vote.
How will citizens provide feedback? Comments can be posted on the Town’s Facebook page or submitted directly via email to Town Manager Dawn Francis at firstname.lastname@example.org.