Essex and Essex Jct. are leaving a combined $1.4 million on the table each year it remains without a local option tax. That’s according to a new report from the village capital committee, which has asked local elected officials to consider using the one percent tax to increase funding for the municipalities’ costliest infrastructure projects.

“We feel it’s time that our community reevaluate,” said village president and capital committee chairman Andrew Brown.

Local option taxes, or LOTs, help municipalities raise money without directly bumping property taxes by levying a percentage tax on three types of transactions: general sales, rooms and meals, and alcoholic beverages.

Sixteen Vermont municipalities currently levy the one percent sales taxes, including Colchester, Williston and Winooski. Supporters of the move here say that’s all the more reason Essex needs one: Local residents who shop in nearby towns are funding major projects there without reaping the same benefits in their own community.

The committee now plans to share its report with the trustees within the next couple months before bringing the topic to a future joint meeting. If officials agree to pursue a LOT, they will still need to make some decisions, starting with timing.

The joint boards expect to spend much time and energy over the next year discussing a potential merger, with a hopeful vote date of November 2020. So Brown expects officials will need to determine whether it makes sense to tackle the LOT topic before or after a merger vote.

“We don’t want to overwhelm the community,” Brown said. “We don’t want to have there be too much at one time.”

They will also need to figure out how much money each municipality is due. That’s because when businesses report their sales to the Vt. Department of Taxes, they self-identify their location, Brown said. With all of Essex identified under the postal zip code for Essex Jct., the “overwhelming majority” of businesses show they are in the village, Brown said.

“Realistically we know that what’s being reported isn’t what’s accurate,” he said. “So we need to make sure the distribution between the town and village makes sense.”

Then there’s the question of what to do with the money. Seventy percent of the revenue stays with the municipality while 30 percent goes to the state, which uses the money to cover the administrative costs of the program and to reimburse municipalities for state-owned buildings within their boundaries.

Municipalities can individually decide how to spend their share, and local communities have done so in a variety of ways. Colchester, for example, recently proposed spending millions out of its LOT fund to help pay for a new sewer line along Malletts Bay (the measure eventually failed at the polls). South Burlington, meanwhile, uses its $3.5 million in yearly LOT revenue to tamp down the tax rate and pay off its police station bond, according to VtDigger.

Members of the village capital committee recommend any money raised from the LOT be funneled into the capital budget. Last year, the village doubled the yearly percentage increase paid into that fund at the committee’s urging, fearful that the village’s infrastructure needs will soon outpace its ability to pay for them. Funds from a LOT would further sway that balance in the right direction, Brown said.

There will likely be some debate over the move, especially among businesses, which are forced to pay additional taxes under a LOT by either eating the difference or passing the cost down to their customers. And residents have already shot down a previous proposal in 2009 that would have placed a town-wide 1 percent tax on local sales. Officials said it would have raised about $850,000 annually, but media reports noted IBM officials claimed the tax would have affected the facility’s ability to stay competitive.

Still, Brown believes there’s an appetite to spend more money on infrastructure projects, pointing to a resident’s request passed on Town Meeting Day that added $100,000 into the town budget to pave more roads. The measured passed after a floor vote.

“We know there’s more work that needs to be done,” Brown said.