Vermont Business MagazineThe Legislature is proposing a 10-point plan that would raise about $31 million annually to pay for the state's mandated clean water plan. The EPA is requiring the state clean up Lake Champlain and other bodies of water over the next 20 years at a total cost of $2.3 billion. The state funding gap is about $25 million a year. The legislative proposal, which Governor Phil Scott vehemently opposes, would fill that funding gap primarily by raising the rooms, meals and alcohol tax by 1 percent ($18.9 million) and adding $10 to motor vehicle registrations ($6 million).
TheHouse Natural Resource, Fish and Wildlife Committee sent its 10-point funding proposal to the Ways & Means Committee Tuesday. See details below.
Scott’s Communications Director Rebecca Kelley issued the following statement Tuesday night: “Today the House Natural Resource, Fish and Wildlife Committee released a memo and draft legislation that would add over $30 million in new revenue on the backs of Vermonters and businesses, beginning in 2019. Governor Scott has been clear that Vermonters and Vermont businesses cannot afford to pay more and that he will not sign a budget or a bill this year that adds new taxes, fees or surcharges. He campaigned on this commitment, and was elected by a strong majority of Vermonters to see it through.
“Treasurer Beth Pearce has proposed an interim plan to fund the State’s clean water efforts, and the Governor’s FY 2018 Capital and Transportation budgets commit the full $50 million the Treasurer recommends for those two years. This plan gives the Legislature time to fully review financial tools and existing revenue sources to fund clean water efforts. It also gives time to work with key stakeholders, and develop a framework for allocating the funding across sectors to ensure the balance of the investment is made in accordance with expectations established in Act 64, and the accountability framework Vermont provided to the EPA. Making decisions now about the appropriate funding source two to three years away is premature at best. Why the Legislature would not take that time to explore alternatives and think creatively – and, instead, instinctively turn to increasing taxes and fees on Vermonters, whether this year or two years down the road – is baffling.
“We face a crisis of affordability that’s contributing to a shrinking workforce and making it harder to grow the economy. Continuing to make Vermont less affordable is the wrong approach. In contrast, Governor Scott has proposed a tax relief package that encourages innovation, economic development and energy efficiency, and a balanced budget that does not raise taxes and fees, while investing in protecting our impaired waterways.
“Vermonters need State Government to focus on growing the economy and making Vermont more affordable, which will generate the resources we need to increase investment in priority areas like clean water.”
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Editorial: Property on the table
The Legislative proposal would raise a total of $30.8 million to $31.1 million annually:
- Repeals sunset of 0.2% Clean Water Surcharge on property Transfer Tax ($4.7m to $5m)
- Directs that fines collected by Agency of Agriculture for water quality violations be deposited in Clean Water Fund ($175,000 to $225,000)
- Directs that fines collected by ANR for water quality violations be deposited in Clean Water Fund ($200,000)
- Directs that fines collected by Attorney General for water quality violations be deposited in Clean Water Fund (No estimate available)
- $10 Annualized Clean Water Fee on Motor Vehicle Registration ($6m)
- Clean Water Affinity Card (Minimal)
- 1% increase in rooms tax to 10% ($5.3m rooms);1% increase in meals tax to 10% ($11.7m meals);1% increase in alcohol tax to 11% ($1.9m alcohol) TOTAL:$18.9m
- Application of sales tax to rental of marina slip spaces, and limousine services ($610,000 limos,$210,000 marinas) TOTAL: $820,000
- Application of use tax to rental of marina slip spaces and limousine services (No estimate provided)
- Working Group on Water Quality to recommend assessment of statewide impervious surface fee, or per parcel fee, or both (Estimate depends on recommended legislation)
- Repeals Secs. 1, 2, 3, 4, 5, 7, 9, and 10 on July 1, 2021 when a statewide assessment recommended by the Working Group on Water Quality would be in place. (None)
The Committee recommends creation of a working group to develop a per parcel, per acre, or impervious surface fee to be assessed on all property in the State. The committee expects the fee to be effective by July 1, 2021. On that date, the attached recommended revenue sources would sunset. The recommended revenue sources also would not go into effect until July of 2019, the date when water quality funds from the State Treasurer are no longer available.
The Treasurer's proposal would fund the first two years with current bonding authority of $50 million ($25 million each year) and then use property assessments or property tax to fund the $25 million annual cost for the next 18 years. Other revenue sources would fund the bulk of the $62.4 million per year for 20 years needed to fulfill the EPA's mandate that Vermont clean up its waterways, particularly Lake Champlain.
Treasurer Pearce estimates the 20-year total clean water costs at $2.3 billion. Existing revenue streams produce $1.06 billiona year, leaving a 20-year total gap of $1.25 billion. Annual compliance costs are estimated at $115.6 million, with existing annual revenue at $53.2 million, leaving a gap of $62.4 million per year, which includes all public and private costs, such as costs to developers and farms. The state share of the gap is estimated to be $25 million-$30 million a year.
Source: Governor 2.28.2017