In the spring session, the Vermont Legislature passed Act 73 mandating the Agency of Natural Resources to form a working group to develop long-term funding recommendations for clean water efforts. The Act 73 Working Grouphas issued its draft report and the Agency Secretary, who chairs the group, discussed the document during a conference call this morning.
The Water Quality Funding report examines existing clean water funding and presents recommendations for long-term funding. Vermont’s treasurer has estimated that the state will have to pay upwards of $25 million per year over the next 20 years to meet federal clean water mandates. The current level of capital funding is about $22 million a year.
The report states that long-term investments are needed to “restore and sustain the high quality of Vermont’s waterways.” It does not provide new revenue sources but offers five recommendations. The first is continued utilization of existing state revenues to fund clean water through fiscal year 2021. It also recommends establishing approaches for revenue collection that are cost effective, pursuing technological and regulatory innovations and committing to adaptive management.
Vermont Agency of Natural Resources Secretary Julie Moore, the Working Group Chair, defended the report for not being more aggressive in its approach. “This is a 20 year proposition. There are regulatory as well as planning and assessment requirements that kick in over time.”
Moore says the working group also found that municipalities felt disproportionately burdened. “According to our estimates right now about 35 percent of the total cost of clean water implementation would fall to municipal rate payers and tax payers. These costs take the form of cost share on waste water treatment facility and combined sewer overflow projects, cost share on municipal roads projects as well as cost share on municipal developed land retrofit projects all of which are required under Act 64.”
Moore says there was a lack of consensus to create a water quality tax, but they found the most equitable and long-term funding method could be a fee based on the amount of runoff from a parcel. But the report concludes that administering such a per-parcel fee would be inefficient. “Both the Tax Department and the League of Cities and Towns developed proposals assuming a separate bill would be administered. The cost of raising those revenues using a separate bill becomes disproportionate. Both the Tax Department and the League of Cities and Towns provided estimates on the order of 4 to 5 million dollars to stand up and administer a separate billing system. And we were targeting an amount of revenue to be raised between 20 and 25 million dollars based on the work contained in the Treasurer’s report. So that would give us an administrative cost of on the order of 20 percent of the revenue raised. And certainly that seemed disproportionate.”
Vermont’s capital bill is completed on a biennial basis. Current water quality funding for fiscal year 2018 is $22 million and the proposed 2019 allocation is $23 million. Moore reports that the working group anticipates fiscal years 2020 and 2021 funding at approximately $15 million per year, diminishing to $10 to $12 million in fiscal year 2022. “We recognize that after fiscal year ’21 existing resources will be stressed and insufficient to meet clean water demands, current clean water demands. So our cost estimates may well evolve over time depending on our ability to implement some of the regulatory and technological innovations that we’re pursuing. But based on current cost estimates we do not believe there is sufficient existing resources to fully fund clean water work after FY21.”
Vermont Senate Natural Resources Committee Chair Christopher Bray is introducing a per-parcel fee bill and finds the overall report disappointing, particularly the continued reliance on capital funds. "We've gone as far as we can with this reliance just on capital dollars and we need to establish a robust, sustainable, long-term funding mechanism that’s adequate to the task at hand. To be direct about it the Act 73 Working Group, although they were asked to do that, they didn’t do that. They gave us an interim solution and recommended further study.”
A working group also generated a report for the legislature detailing the investments and types of water quality projects currently underway in Vermont.
