Town managers urge larger local‑option tax share to cover costs from state motel program; committee weighs data requests

May 8, 2025 — Town managers from Brattleboro and Manchester asked the Senate Government Operations Committee to increase the municipal share of the local option rooms and meals tax as H.397 moves through the Legislature. They argued that towns hosting the state’s General Assistance (GA) motel program face outsized municipal costs for emergency response and related services.

Why it matters: Under current drafts discussed in committee the local option tax split is moving from a 70/30 split toward a 75/25 split (town/state). Municipal officials asked for an 80/20 split so towns retain more revenue to offset increased municipal costs associated with the state motel program and other services.

Sean Potter introduced himself as the town manager for the town of Brattleboro and described municipal costs tied to six motels participating in the state GA motel program. He said the town recorded roughly 1,175 emergency response calls to those six motels in 2024 and estimated municipal response costs of about $544,000 for that activity. Potter said the town’s analysis showed 85% of calls to those motels involved people not from Brattleboro, and contrasted that with four other motels not in the state program that generated about 137 calls and roughly $55,000 in costs.

Scott Murphy, town manager of Manchester, urged moving to an 80/20 split to preserve municipalities’ share after administrative fees. He said Manchester paid about $95,000 in administrative fees in FY25 and noted that growth in return counts (used for per‑return fees) increases administrative costs even if local municipal business presence does not grow.

Several committee members expressed sympathy for municipalities and emphasized the need for more data. Senators asked the Joint Fiscal Office, Tax Department, AHS (Agency of Human Services) and VLCT (League of Cities and Towns) for updated analyses: the overlap between municipalities that host GA motel program clients and those that have adopted the local option tax; the scale of municipal impacts statewide; and updates to previous JFO surplus analysis for the pilot fund in light of additional towns that signed up for the tax in March.

Committee members raised equity concerns about reallocating locally authorized tax revenue from one municipality to another and said they prefer a targeted factual basis before changing the split. One senator proposed setting 75/25 for the current year with a conditional change to 80/20 in a later year if agencies confirm fiscal capacity and impacts.

No committee vote was recorded in the provided transcript excerpt.