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Municipal leaders ask for authority to tax and inspect short-term rentals to protect infrastructure and housing supply
Summary
The Vermont League of Cities and Towns told the House Committee on General and Housing that municipalities need new tools — such as registries, inspection authority and the ability to levy local taxes on short‑term rentals — to prevent newly created infill housing from converting to short‑term rentals and to pay for local impacts.
Testimony to the House Committee on General and Housing on Feb. 6 raised concerns that new infill housing permitted under Act 181 could instead become short-term rentals (STRs) unless towns are given more regulatory and taxing authority.
Samantha Sheehan, municipal policy specialist for the Vermont League of Cities and Towns, said municipalities “need the additional regulatory tools, including tax authority, to ensure that the new infill scale housing being created does not lead to a further proliferation of short term rentals.” She told the committee towns can use registries and inspections to enforce safety and limit party sizes but argued towns currently lack the tax tools to mitigate impacts.
The committee heard that state policy now directs a 3% statewide surcharge on short-term rentals into the state education fund; towns said they do not directly benefit from that revenue. Sheehan contrasted the limited municipal share from the existing rooms-and-meals option with Burlington’s charter authority to charge higher local assessments: “Burlington chooses to put [short‑term rental revenue] to the housing plus 1. It's not, yeah, raising almost a million a year,” Sheehan said, describing Burlington’s example of local taxation and reinvestment.
Why it matters: Witnesses told the committee STRs can create concentrated wastewater, fire-safety and public-safety impacts in tourism-dependent towns. Without local revenue authority, towns said they have limited means to fund inspections, enforcement or mitigation programs.
What speakers proposed: VLCT asked lawmakers to consider statutory changes that would allow municipalities to impose local fees or a local surcharge on short-term rentals, expand registries and inspection authority, and permit use of those local revenues for housing mitigation, inspections and public-safety enforcement. Sheehan said municipal officials could draft specific language if the committee requests it.
Ending note: Committee members requested proposed language for local taxing authority and said they would follow up with municipal stakeholders on design and revenue-sharing implications.
