BELLOWS FALLS -- Members from numerous fraternal organizations in the area convened at the American Legion Post 37 last week to rally in opposition of a bill before the Vermont Legislature that would tax break-open tickets and affect the non-profit groups.
Former National Vice Commander Linda Perham told the nearly 90 people in attendance on March 6, that she decided to organize the meeting when she learned about House Bill 66. The bill, supported by Gov. Peter Shumlin and introduced State Rep. Jim Condon (D-Colchester), would tax the sale of break-open tickets by 10 cents if signed into law.
Break-open tickets are described by Bill Goggins, director of enforcement for the Vermont Department of Liquor Control, as a type of betting ticket that act as "manual slot machines." They typically sell at a bar or tavern for $1 and have cash payoffs. By law, only non-profit organizations can sell them.
Perham said Shumlin initially told the public the tax would raise $17 million for fuel assistance to low-income households. She said, however, the Vermont Legislative Joint Fiscal Office calculated a figure closer to $6 million, which would go into a general fund instead of a winterization program.
"You are (Shumlin's) cash cow," Perham told the crowd in a speech at the start of the meeting. "It's pretty simple ... (To him), you're just a number on a ledger to balance the budget for the state of Vermont's big black hole.
State Rep. Carolyn Partridge (D-Windham-4) was in attendance to voice her support for Perham and the audience -- which featured members of the American Legion and other fraternal organizations -- and told them she will fight House Bill 66.
After Perham spoke, Partridge said she understands the governor is looking for ways to increase revenue (as the state is starting off the year in a $69 million hole) but thinks a tax on fraternal organizations is a bad idea.
She said toward the end of the meeting the "sequester" situation in Washington, D.C., means Vermont will get $15 million less from the federal government over the next seven months. Still, she believes it would be "like taxing charitable donations" if the bill becomes law.
"I'm with you on this," she told the audience.
Her districtmate and fellow Democrat, Matthew Trieber, could not attend the event but sent a letter of support.
Perham continued to speak out against the House bill, comparing Shumlin to Mr. Potter, the cold-hearted villain who is concerned only with making money for himself in the 1946 film "It's A Wonderful Life."
She said the American Legion is completely apolitical and does countless good deeds for the community, like funding field trips to museums, support food shelves, purchasing band uniforms and providing Memorial Day services. All these benefits would be trimmed down if fraternal organizations are taxed, she said.
Goggins, the director of enforcement for the state Department of Liquor Control, said he thinks most of the opposition to House Bill 66 comes from misconceptions about it. He said fraternal and non-profit organizations have suffered greatly due to a lack of regulation of break-open tickets.
He said only nonprofits can organize games of chance, so many bars will become members of nonprofits and sell break-open tickets at their place of business. Goggins said he has seen many cases of bars turning over only a small percentage of ticket sales and called the practice "for lack of a better word, embezzling from nonprofits."
He said the organizations often receive only $500 when they should get tens of thousands of dollars. Goggins said organizations have been defrauded of millions of dollars. He explained that while fraternal and non-profit organizations will pay the 10-cent tax up front, the bar selling each ticket will add that tax onto the price.
"There is no out-of-pocket expense for the nonprofits at all," he said, adding that it's the sample principle as a retail sales tax.
Perham and others are concerned the tax could deter people from buying the tickets. Goggins does not buy that argument because people still purchase goods despite the state sales tax and smokers still go to bars and clubs despite the smoking ban that went into effect in 1996.
"Nobody likes to pay more taxes," he told the Reformer. "But this is gambling. People who like to gamble will continue to gamble."
He also said a conservative estimate of the tax revenue generated is, like Shumlin said, $17 million and disagrees with the joint fiscal office's figure of $6 million.
Perham eventually turned the floor to Jeff Temer, co-owner of Best Bingo Supplies in Colchester, who drove to Bellows Falls because he said his business would be negatively affected if the bill became law. His company sells and services professional gaming supplies, including pool tables, juke boxes, coin-operated video games and bingo equipment.
"I call it a self-destructive tax," he said, adding that Vermont ranks third in the country in break-open ticket sales. "They are going to destroy the very same tax revenue source they're trying to get money out of."
He told the Reformer the House bill is "misguided and miss-conceived."
Members of various other organizations -- such as The Knights of Columbus, the Polish American Club and the Royal Order of the Moose -- took the podium to address the crowd. All spoke about how much the tax would hurt their organizations, as fewer tickets will be sold, and told Partridge they will remember how their representatives vote on this issue.
Domenic Poli can be reached at email@example.com, or 802-254-2311, ext. 277. You can follow him on Twitter @dpoli_reformer.