Town Manager Elaine Lazarus on Wednesday responded to an inquiry from the Independent regarding the funding distribution for revenue from the local meals tax that has been collected since Jan. 1, 2025.

The response was triggered by comments made at the Economic Development Advisory Board meeting Tuesday night. Members shared concerns when they learned from new chair Finley Perry that a special revenue account would be created to contain the local meals tax revenue. This account, he said, would contain only the revenue generated during the first quarter of the 2027 fiscal year beginning July 1 of this year — not since the time the local meals tax was implemented, as he and other members had anticipated. The money, Perry said, went into the general fund.

The funding generated by the local meals tax is slated for the hiring of an economic development director and other town economic projects. This has been a town goal for the past couple of years. EDAB created a job description previously, and the position is anticipated to be posted later this year, Perry said at the meeting.

The fund could not be set up until after the home rule petition passed the Legislature and was signed into law, he explained.

Financial situation explained

Lazarus, in two emails to the Independent Wednesday, explained the legislative process that needed to be undertaken in order for the fund to be created.

“It’s important to note that the Legislative Act specifically states in item b that ‘the amount of the local meal tax collected….by the town for the fiscal year beginning July 1, 2026 and each fiscal year thereafter shall be credited to the …Fund.’” Lazarus stated. “The town has no ability to credit funds received before July 1, 2026 to the fund.”

She shared the legislation, entitled “Chapter 191 of the Acts of 2026 – Economic Development Special Revenue Account.”

“Until the Legislature and Governor approved the Special Act to create the fund, it did not exist,” stressed Lazarus. “Therefore, the meals tax revenue could not be deposited into it  – because it did not exist. Now that the fund has been created, all meals tax revenues for this fiscal year (FY27) and indefinitely into the future will go into the fund.”

Special revenue account detailed

Lazarus noted that the fund is not only designed to provide a salary for an economic development director but also to be used for economic development initiatives.

“The fund’s purpose is detailed in the attached legislation,” she stated. “Expenditures from the fund will be ‘used to support economic development projects, activities, operations and administration in the town of Hopkinton, including those that stimulate economic growth, attract and retain businesses and improve infrastructure.’

“This Fund language can accommodate an economic development position, programs, grants, etc.,” continued Lazarus. “The FY27 budget assumed that the Fund would be created for this fiscal year, and the following appropriation was voted at the 2026 Annual Town Meeting:

• Personal Services: $60,000
• Expenses: $8,000

“We estimated that in FY 27, the meals tax revenue would be $230,000. This period covers July 2026 through June 2027,” she added. “Therefore, if nothing is spent from it, the fund is anticipated to have this balance.”

The special revenue account will fund a portion of the economic development director’s salary for the current fiscal year, explained Lazarus. She also clarified other uses for the money.

“The intent is to use the Personal Services line item for the salary of the new position (a portion of the year, starting in early 2027); the expenses can be spent on anything that the Fund allows,” she stated. “For example, a specific program that the EDAB could suggest.”

The fund is subject to appropriation by Town Meeting, she noted.

Reiterated Lazarus: “So, each year, there will be a line item in the budget for expenditures – like every department, except that the funding for this one comes from the special account.”

Creation of tax outlined

The town has been collecting a meals tax of 0.75% since Jan. 1, 2025. The money was designated to be used toward economic development initiatives. This charge is in addition to the state’s 6.25% sales tax on meals sold by or bought from restaurants or any restaurant part of a store. Approved by the Select Board on Oct. 15, 2024, it was passed by Special Town Meeting on Nov. 18, 2024.