Local sales taxes begin, but property tax bills get a one-week delay
July 13, 2024 | By Lisa ScagliottiWaterbury’s new 1% local sales taxes went into effect at the start of this month and sales receipts in town should reflect the new charge on retail sales, rooms, meals and alcohol purchases.
A 1% local sales tax will mean everyone shopping in Waterbury will contribute to a new revenue stream for the municipality, not just property owners. File photo by Gordon Miller
This is also the time of year when property tax bills land in the mail, but taxpayers watching their mailboxes may have noticed a delay. They should be landing any day now due to several logistical hiccups and the Waterbury Select Board recently moved the first payment date from Aug. 9 to Aug. 16.
The board held a special meeting on Monday morning, July 8, to adjust the payment schedule.
Town Manager Tom Leitz explained that state law requires property tax bills to be postmarked at least 30 days before the first payment is due. On Town Meeting Day, voters approved the first payment date to be Aug. 9 and the second payment date by Nov. 8.
But two factors were slowing down the process to get bills in the mail by Tuesday, Leitz said. The Harwood Unified Union School District just gotten final information to the town office the previous week. That was much later than usual given that voters didn’t approve the school district’s $47.9 million 2024-25 budget until May 30. Elections have a 30-day period afterward during which someone could challenge the results. The school district needed to wait until after June 30 to send its data to the towns, Leitz explained.
The second wrinkle was that the town staff print the tax bills, but the paper used to print the bills had not yet arrived. The delayed shipment was expected to arrive by Monday, Leitz noted. That left very little time for the bills to be printed, folded and prepared for mailing in time to ensure they were postmarked by July 9, he said.
On Town Meeting Day, voters approved wording in the tax payment article that allowed the Select Board to adjust the due date for the first payment given uncertainty at the time regarding the school budget. The Select Board at the Monday meeting voted unanimously to make the new first payment date Friday, Aug. 16; the second payment due date in November is unchanged.
The bills themselves will reflect the new payment due dates. Town Clerk Karen Petrovic also noted that the town office will be open until 5:30 p.m. on Aug. 16 to accept tax payments.
More information on making property tax payments, property tax calculations, etc. is online on the Property Taxes page on the town website.
Leitz told the board that some municipalities contract for printing and mailing their tax bills and that he would look into the cost of using such a service in the future.
Taxpayers can expect to see their bills in the mail any day now. Petrovic said they were mailed this week.
Property tax rates have been the focus of much attention and at the heart of this spring’s multiple school budget votes given that school taxes account for the lion’s share of property tax bills.
The homestead tax rate for the combined school and town property taxes for Waterbury comes to $2.7559 per $100 of assessed property value. ($2.1969 for school tax, $0.559 for municipal tax). A home assessed at $200,000 would have a tax bill of $5,511.80 divided into two payments, one each in August and November. The municipal tax rate represents an increase of 2.15%; the school tax increase comes to 14.69%.
School district officials have pointed to a state program to assist Vermonters with property tax payments based on income. The program can assist taxpayers who meet requirements and who had a 2023 household income up to $128,000. The maximum credit is $5,600 for the education property tax portion and $2,400 for the municipal property tax portion. Find details about the Property Tax Credit program online with the Vermont Tax Department.
Local sales, rooms, meals & alcohol taxes
Voters in December approved the creation of a charter for Waterbury that allows the municipality to levy local option sales taxes. The legislature and Gov. Phil Scott signed off on the town’s request to add 1% to the existing state sales tax, rooms and meals taxes, and alcohol taxes.
Waterbury joins more than two dozen other Vermont communities including Stowe, Williston, Barre and Burlington that have local sales taxes. Some communities, such as Montpelier, only charge a local tax on rooms, meals and alcohol.
Waterbury town officials estimate that the new taxes could bring in approximately $650,000 in revenue per year that would be used for town expenses. They touted the benefits of creating a source of income that doesn’t solely collect money from property owners. Anyone making purchases in local stores, staying in local hotels and inns, dining at local pubs and restaurants will contribute an additional 1% on their purchases now.
The Vermont Tax Department contacted the affected businesses advising them on the adjustment to make in their checkout systems to ensure they collect the tax. Payments are made to the state which, in turn, will send the town quarterly payments of its share of the revenue, Leitz explained. Given that the taxes are going into effect midway through the year, Waterbury would only see half the expected revenue for 2024, he noted.
Local merchants say they were able to make the adjustments to their automated checkout systems relatively easily to incorporate the new tax. For retail purchases, the new tax adds 1 cent on every dollar of a purchase for a total of 7 cents per dollar of sales tax.
“Overall, it was quite easy to put in place. There was a little bit of back-and-forth with the point of sale company, but we were ready to go by the time our store opened on the 1st,” said Dan Snyder, owner of Cold Hollow Cider Mill. “Although this is a new tax for Waterbury, many of our staff members and I are quite familiar with adding a 1% local option since they have been in place with many townships throughout Vermont for some time.”
Some local merchants will break down the sales tax showing the local 1% separately on sales receipts, others will just show the total tax.
Stowe Street Emporium owner Kathy Murphy said sales receipts in her store now show the state and local taxes. As of early this week, she said customers have not noticed or commented on the change.
Bridgeside Books owner Katya d’Angelo said there may be some minor adjustments for her staff to be mindful of regarding the tax transition. For example, a customer making a return on an item purchased before the tax increase would get a refund of the total price they paid with the previous tax calculation. Those instances are few though, she pointed out, and likely won’t be a consideration for very long.
One key merchant in town appeared behind on the transition at the end of the first week. Kinney Drugs on July 5 was still charging just 6% sales tax on purchases. Waterbury Roundabout contacted the company’s corporate headquarters in East Syracuse, New York, asking about the delay.
On Tuesday, the company’s Marketing and Advertising Director Judy Cowden responded, saying that the Waterbury, Vermont, store’s computer systems were being updated to reflect the change. She acknowledged that the store was lagging behind in collecting the additional tax revenue. “As an organization, Kinney Drugs is responsible for any additional tax not collected, and the City of Waterbury will be made whole,” she replied in an email.
Municipalities receive two-thirds of the local option tax revenue. The state keeps one-third to put into the PILOT fund – the payment in lieu of taxes revenue it gives to cities and towns where the state owns property. With two state parks, state forest land and state offices, Waterbury has a significant amount of state-owned property. In 2023, the town received a state PILOT payment of $400,000. Adding revenue from Waterbury’s local option taxes to that pool of funding will increase the amount the state will have to distribute to all of the towns receiving PILOT funds this year, including Waterbury.
Until the new taxes are in effect and data is available regarding collections, Leitz said he was not sure yet how much Waterbury’s PILOT payment would change.