SOUTH BURLINGTON — In the 1989 movie “Field of Dreams,” actor Kevin Costner uttered one of Hollywood’s most famous lines: “If you build it, he will come.”
Costner’s baseball-fan character was referring to constructing a ball diamond for his dead father. Popular culture has since altered the line to “If you build it, they will come.”
Some of those stakeholders would like non-South Burlingtonians to share some of the financial burdens through an increase in the local option tax.
The multi-million dollar projects are the latest to get attention because of their approach to financing — increasing the city’s sales tax from 7 percent to 8 percent via a local option tax on food, lodging and alcohol.
Officials estimate that the arts center might cost $30 million, while the recreation center might cost $15 million. This means the city could need to raise $45 million, potentially.
City and arts officials have suggested that the tax could be sunset, or ended, after the project is completed. But some experts are skeptical.
“We have a local option tax of one percent now; it does not have a sunset provision,” South Burlington City Manager Kevin Dorn told TNR.
Dorn, who served as a commerce cabinet official in the administration of Gov. Jim Douglas, stressed that increasing the sales tax by even one percent will be an idea ultimately decided by voters on Town Meeting Day, which will be held around the state on Tuesday, March 5.
“This initiative is really project driven. The South Burlington Recreation and Parks Committee has been working for many years to promote the construction of an indoor recreation facility in South Burlington, and what the City Council will consider is the committee’s recommendation,” Dorn said.
According to Dorn, the South Burlington City Center for the Arts Committee has been working for over two years on a proposal to construct a Creative Arts Center that is designed to fill a significant gap in the arts infrastructure in the region and state.
The option tax wouldn’t be the only vehicle by which the centers would be funded, Dorn stressed.
“We expect a robust effort at private fundraising to support both projects,” he said. “There is already a foundation in place to support fundraising for the proposed recreation facility. Grants and further support from the state will also be pursued.”
The exact cost of construction hasn’t been determined yet, but Dorn has noted that the arts center has been thought of costing upwards of $30 million.
The method of potentially funding these projects through an additional one percent on the local option tax is the joint proposal from the two committees and staff, according to Dorn. This funding mechanism would be accomplished through an amendment to the city charter that would first need to be approved by the City Council, then the voters, and finally the Vermont Legislature. It will be up to those groups to determine if the increase is a good idea from the taxpayers perspective.
The most immediate issue for the South Burlington City Council and voters is going to be the question of increasing the local option tax.
“If approved, the votes on actually incurring debt on the individual projects will not come until a later date,” Dorn said. “So, initially consideration will be on the funding source, and consideration of actually authorizing debt for the projects would come later this year or next.”
Other officials aren’t so sure of the wisdom of an option tax.
Option taxes: Nickel and diming
State Sen. Chris Pearson of South Burlington’s Chittenden County district, despite being a pro-tax Progressive/Democrat, isn’t exactly jumping on board for a new sales tax to fund the projects.
“I am not a big fan of sales taxes in general because of their regressive nature,” Pearson told TNR. “Local voters are the entity that will have to decide if they like this approach.”
Sen. Ginny Lyons, another Chittenden County Democrat, also has mixed feelings about option taxes. However, she thinks if presented openly and clearly, South Burlington voters would likely approve it.
“The local option tax originated when school funding changed and took much of the benefit from having development and put that money into the education property tax,” she said. “At that time, I was chair of the Selectboard in Williston. The town had been somewhat undercut. … We lost a great deal of money to the state. We were one of Vermont’s so-called Gold Towns. We were given the option tax to help us fulfill the benefit from having development.”
Lyons said that towns with strong economies based on either welcoming tourists or out-of-town shoppers (or both) — such as Burlington, South Burlington and Williston — stand the most to benefit from option taxes, but there are some cautions.
“Is an option tax a good thing or bad thing? Well, it’s hard to say,” Lyons said. “But municipalities such as South Burlington have the authority to do this — that is, raise the sales tax. But before they raise it a whole percent, I would think they would want to have the voters fully informed with some kind of public process. Any approval should absolutely include the sunset. I think South Burlington understands where it is with its bond debt. This may be one option for them, but the sunset should be included. That’s my opinion. If it’s a vote on the floor on Town Meeting Day that could be dicey, but Australian ballot the next day would surely follow.”
Lyons added that the state will benefit from the proposed South Burlington construction by getting 70 percent of the revenue. However, voters might “start to get concerned about what they’re paying.”
Vermont Department of Taxes business analyst Douglas Farnham said he’s seeing more option taxes being discussed in Vermont. The tax originated under Act 60.
“Gold Towns can vote-in option taxes on their own, but other towns have to vote on the charter and have the legislature approve it,” he said. “The big difference are the Gold Towns, like South Burlington; they can legally do it on their own.”
However, when it comes to tax-related sunset promises, he’s somewhat skeptical.
“I tend to see sunsets as not happening,” Farnham added. “When it comes to taxes, new revenue streams are difficult to give up. But the South Burlington example may be more likely happen although it’s more complicated. You’d end up having South Burlington going back to the legislature to extend it.”
Filling a need
The idea of having non-South Burlington residents help share the cost of an arts center — in particular, by paying additional sales tax — stems from the idea that South Burlington’s proposed 500- to 600-seat arts facility likely will attract audiences from around Chittenden County. It will fill a need, supporters claim, between Burlington’s 1,400-seat Flynn Center for the Performing Arts and other smaller regional theaters.
The idea of building an arts center in South Burlington began with Tim Barden, a performing arts photographer as well as a theater and information technology educator.
Barden envisions the proposed arts center as a key addition to regional community infrastructure.
He told TNR that a study by Don Hirsch Design Studio consultants of Montpelier shows the proposed arts center will attract young and old with its planned 21st century high tech and new media approach to arts venues.
“What we’re trying to do is create an opportunity for many organizations to participate in the use of this space,” Barden said. “We can catch the wind that’s at our back right now; we have a potential location for the center.
“Getting all this on the March Town Meeting ballot would be preferential, but do we get there? If we don’t this March, it will delay things by a year. In the end, however, everyone involved sees this as a net benefit to the city center. But the voters may not feel that way. The City Council has questions. That’s why we’re working hard to figure what the right approach should be.”
In the end, the laws of economics will determine whether arts and recreation centers can be built using option taxes and grants, and then be marketed and sustained by long-term patronage.
On the subject of South Burlington’s proposed arts and rec centers, University of Vermont economics professor Art Woolf tends to look beyond the lure of stage lights and high-end fitness equipment.
“The question of an option tax will come down to whether the townspeople want this and what the impact will be,” he said. “It will make shopping in South Burlington a little less competitive than elsewhere.
“In Chittenden County the three main shopping areas are Burlington, South Burlington and Williston. In South Burlington it’s the University Mall, which isn’t doing all that well at the moment. … So, will an option tax discourage people from shopping in South Burlington? Maybe it will have the opposite effect and encourage Burlington and Williston to add another penny to their option tax.”
Lou Varricchio is a freelance reporter for True North Reports. Send him news tips at email@example.com.