UPDATE on long term funding for Clean Water Projects
March 11, 2019
Background: Federal EPA Requirements
Vermont is required to fund $2.3 billion over the next 20 years to comply with federal pollution reduction orders for Lake Champlain, Lake Memphremagog and other water bodies in the state. Since the 2015 passage of Act 64, Vermont’s Clean Water Act, the state has used short-term sources — such as appropriations from the capital bill — for the majority of its share of the funding. Going forward, Vermont is obligated to identify a stable, long-term clean water funding source.
Governor’s Budget Plan for Long Term Funding
In his budget address, Governor Scott laid out a proposal to use a portion of the estate tax for clean water funding, (while also reducing the number of individuals who would be subject to paying the estate tax). His plan also included using some general fund money generated from the property transfer tax, and other sources. Next year, as an example, the budget calls for a total of $48 million for clean water efforts, including management of the state’s 7,000 miles of dirt roads and on-farm water quality projects. That total includes more than $19 million in federal funds.
Preliminary reaction from Legislators
Legislative leaders have expressed concern about diverting revenue from the general fund and creating a funding gap for other state priorities, as well as the volatility/variability of the estate tax. As an alternative, the Vermont Senate Natural Resources Committee was expected to consider a clean water funding bill that would contain a combination of a per parcel fee and an impervious surface fee.
Advocates Weigh In
The Vermont Water Caucus, (including the Vermont Natural Resources Council, Vermont Conservation Voters, Audubon Vermont, Vermont Chapter of the Sierra Club, Lake Champlain Committee, The Nature Conservancy in Vermont, Connecticut River Conservancy, Watersheds United Vermont, and Conservation Law Foundation.) developed a series of principles to apply to any long-term funding sources.
• Funding sources must be stable and sufficient to meet Vermont’s needs.
• Funding sources must be stable, predictable and reliable from year to year, to support ongoing, consistent clean water protection and restoration efforts.
• Funding must be flexible in terms of its use, to meet the full and evolving scope of clean water needs across the state.
• Funding must restore our degraded waters and also protect our river and lakes from future degradation.
• Funding sources must minimize negative economic impacts on lower-income Vermonters, who already bear a disproportionate burden of the consequences of contaminated water.
Federal EPA’s Reaction to the Governors Funding Plan
The federal Environmental Protection Agency gave its preliminary approval February 11 to the plan from the Scott administration to fund clean water projects with existing revenues and create regional districts to implement projects, calling it a “sensible framework” that meets the state’s obligations to provide a long-term source for clean water funding.
Specific Legislative Proposals Introduced this Session
Senate bill 96
Senator Bray, D-Addison, introduced S. 96 on February 12.
This bill proposes to establish a Clean Water Board for the receipt and dissemination of Clean Water Funds, sets priorities and eligible entities to receive funds and establishes a Clean Water Assessment on all parcels in the State. Monies collected under the Clean Water Assessment would be deposited in the Clean Water Fund to fund water quality improvement projects in the State. The amount of the Clean Water Assessment shall be approximately $40.00 per parcel, collected by July 1, 2021.
Reported favorably with recommendation of amendment by Senator Bray for the Committee on Natural Resources and Energy on March 2 for the Senate Calendar of March 12.
House bill 171
Rep. Till, D-Jericho, introduced H. 171 that would raise the Clean Water funds through a combination of taxes and fees on parking lots, asphalt sales, hotel rooms, and milk handlers.
This bill proposes to establish an impervious surface fee on all parcels in the State. The bill would repeal the sunset of the Clean Water Surcharge on the Property Transfer Tax. The bill also would establish a Water Quality Occupancy Surcharge on the rent of each occupancy in the State. The bill would impose on milk handlers a fee per pound of fluid milk purchased from a milk producer for the purpose of bottling, manufacturing, processing, distribution, or sale of dairy products in the State. The bill would require a manufacturer of asphalt to pay an assessment per ton of asphalt sold in the State each year. The revenue from the impervious surface fee, the Water Quality Occupancy Surcharge, and the asphalt assessment would be deposited in the Clean Water Fund. The revenue from the milk handling fee would be deposited in the General Fund.
On February 27, Committee on Natural Resources, Fish and Wildlife be relieved of the bill, moved to Committee on Ways and Means.
House bill 64
Rep. Cynthia Browning, D-Arlington, has introduced a bill, H. 64, also based on the idea that contributors to water quality pollution should fund cleanup efforts.
This bill proposes that the Joint Fiscal Office prepare a report on sources of pollution and ways to generate revenue from those activities and the bill would require the Agency of Natural Resources to report on the possibility of establishing stormwater utilities which Burlington, South Burlington and Williston already have, in densely populated parts of the state.
According to the DEC Stormwater Management primer, “A stormwater utility charges fees to property owners who use the local stormwater management system. The revenue can be used to maintain and upgrade existing storm drain systems, develop drainage plans, construct flood control measures, and cover administrative costs. Stormwater utilities are seen as a fair way of collecting funds for stormwater management. The properties that contribute stormwater runoff and pollutant loads and, therefore, create the need for stormwater management, pay for the program”.
January 23, Referred to the House Committee on Natural Resources, Fish and Wildlife
House bill 507
Rep. Dolan, D-Waitsfield, introduced a bill to fund Clean Water Projects through collection of a tax on bottled water at 10 cents per bottle and sugary drinks at 15 cents per bottle. The legislation would also levy a 6 percent tax on barbering or cosmetology services and a .05 percent increase in the income tax.
This bill proposes to raise revenue for water quality projects and programs. The bill would establish a 10-cent per bottle tax on bottled water sold in the State. The bill would establish a 15-cent per bottle tax on each bottle of sugar-sweetened beverage sold in the State. The bill would establish a sales tax of six percent on the value of barbering or cosmetology services. The bill would also raise individual income rates by .05
percent. Revenue raised under the bill would be deposited in the Clean Water Fund for the purposes of that Fund, except that 67 percent of the revenue raised from the excise tax on sugar-sweetened beverages would be deposited in the State Health Care Resources Fund for use according to the purposes of the Fund.
On February 28, referred to Committee on Ways and Means.
Federal Funding Announced by Sen. Leahy on Feb 22
More than $20 million in federal funding was appropriated to Lake Champlain in fiscal year 2019- the highest level of annual federal funding to assist clean up efforts. Sen. Patrick Leahy announced the funding at Burlington’s ECHO Leahy Center for Lake Champlain, which he helped secure in his role as vice chair of the Senate Appropriations Committee. The figure has more than doubled since 2017.
The specific funding lines are $11 million for the EPA Lake Champlain Program, $7.25 million for the Great Lakes Fishery Commission, $1 million for the Lake Champlain Sea Grant, $500,000 for the U.S. FWS Sea Lamprey Control and $1 million for the International Joint Commission Flood Study.
Senate Energy and Natural Resources Committee moves S. 96 to the Senate Floor
On March 1, Senate Natural Resources reported a favorable recommendation to place S.96 on the Senate Calendar for March 12. S.96 would mandate every landowner pay a clean water tax, or “assessment,” of approximately $40 and establish regional planning commissions.
Senator Bray has noted that the differing proposals would “likely end up getting hashed out in a conference committee later in the session”.
For questions or comments on this Update, feel free to contact Martha Hicks Pofit, Chair, FOVLAP Legislative Committee at: email@example.com