Waterbury charter bill clears legislative hurdles

March 23, 2024 | By Lisa Scagliotti 

The bill creating a charter for the town of Waterbury which would allow for local option taxes cleared its final legislative hurdle this week and is headed to Gov. Phil Scott for a signature. 

Downtown banners promote shopping and dining in Waterbury. File photo by Gordon Miller

The bill H.801, sponsored by Waterbury’s two Democratic members of the House, state Reps. Tom Stevens and Theresa Wood, passed the Senate on Thursday. 

The bill would create a simple charter for the town addressing two issues: local option sales taxes and streamlining the municipal hiring process. 

The measure would allow Waterbury to join 23 other municipalities around Vermont that levy local option sales taxes. It would add 1% to current state retail sales (6%), rooms and meals (9%), and alcoholic beverage (10%) purchases.  

The local taxes would not apply to motor vehicle purchases, most clothing, groceries and medicine. The tax would apply to internet purchases, cannabis sales, and short-term rentals in Waterbury such as AirBnB reservations.

Voters in Waterbury in a special vote in December approved creating the charter measures. 

Municipal Manager Tom Leitz told the Waterbury Select Board this week that the state Tax Department advised that if the charter was signed into law by the end of March, which is the end of the first quarter of the year, it could be implemented by the third quarter which begins July 1. If the governor’s signature on the bill comes in April, the new taxes would likely go into effect in the third quarter which starts Oct. 1, Leitz explained.

The schedule is faster than anticipated, Leitz said, noting that he originally expected the new taxes would not be put in place until early 2025. The town budget that voters approved on Town Meeting Day does not anticipate new revenue from the local option taxes in 2024. Leitz on Friday said that if it works out to begin this year, he would propose using new revenue for gravel road upkeep and repairs. 

Town officials have conservatively estimated that the additional tax revenue would be $650,000 per year. Municipalities receive two-thirds of local sales tax revenue generated. The remainder goes to the state for its Payment In Lieu of Taxes program which pays cities and towns where state property – buildings and land – are located. Waterbury benefits from that program as well given state property such as the State Office Complex, state parks and forest lands in town. Waterbury in 2023 received $400,000 from the state PILOT payment. Adding new tax revenue from Waterbury’s local tax would increase the funding for all municipalities receiving PILOT payments. 

The charter’s other precision would give the municipal manager the main responsibility for hiring, appointing, disciplining and removing town employees. It allows the manager to authorize department heads to handle those tasks as well, and it specifies that the select board should approve department head choices. Some positions in town government currently fall under state statute in the absence of a local charter and require multi-step processes for hiring that involve volunteer committees.