[A] final proposal to pay for cleanup of the state’s waterways is taking shape in the Senate, but in the House, some Democrats are concerned that a proposed per parcel fee looks like a property tax.
The Senate Finance Committee on Wednesday voted 4-2 in favor of a water quality funding proposal that includes a $1 per acre fee on all properties greater than 15 acres and a 50-cent per acre fee on forestland enrolled in the state’s current use program. Refunds would be available for payments of more than $10,000.
The Statewide Water Quality fee, as it is known, would be collected by a municipality annually. Beginning July 1, the fee would be assessed by towns and collected as part of the landowner’s tax bill.
Sen. Ginny Lyons, D-Chittenden, who worked on the committee’s funding proposal, said it sets the foundation for assessing taxes based on the amount of pollution created.
“I think we set out in the right direction,” Lyons said, though she acknowledged a tiered tax policy is a heavy lift. “I think we could generate a fairer policy. But this process does allow us to move forward at looking at tiering in the future.”
Under a tiered system, properties with large impervious surfaces, such as a large parking lot, would pay more than properties that include pollution control measures such as a rain garden.
House lawmakers have indicated that they will oppose the Senate’s funding proposal because it requires new tax infrastructure and could be characterized as a property tax.
House Speaker Shap Smith, D-Morrisville, said he would have difficulty supporting it.
“It puts together a new infrastructure for raising revenue and reinforces the notion that we are increasing the property tax. There are some real concerns with it and we will take a look at it when it comes over,” he said.
“I don’t think the concept is going to get a really good reception on the House side,” said Rep. David Deen, D-Westminster, chair of the Fish, Wildlife and Water Resources Committee. “We considered a per parcel fee and did not include it in the final version of the bill because the three committees that reviewed it were not convinced it would work.”
The proposal still needs approval from the Senate Appropriations Committee and then the full Senate.
Despite disagreement over how to fund water quality programs, both chambers have committed to raising new revenue — the House passed a bill raising $8 million and Senate proposals raise more than $10 million.
The House version would raise $5.3 million through a property transfer tax for 2016. Combined with fees on agriculture and pollution permits, the proposal raises $7.6 million in 2016 and $8.1 million in 2017. The bill requires the Secretary of Administration to make a recommendation on how to assess a per parcel fee.
The Senate Natural Resources and Energy Committee boosted 2016 revenue through a $25 flat tax on all properties that would raise about $8 million. The bill also includes fee increases for pollution permits issued by the Department of Environmental Conservation and fees for registering farms, commercial feed, non-agricultural fertilizer and pesticides.
The Senate Finance version includes the same fees. It would raise a total of about $10.1 million in fiscal year 2016.
An official with the Department of Taxes said it would have to set up a new computer system to collect the tax.
The administration’s proposal would have raised $5.9 million through a tax on commercial and industrial parcels beginning in fiscal year 2017. Combined with fees on fertilizer and pollution permits, that proposal would raise $2.7 million in fiscal year 2016 and $8.6 million in 2017.
David Mears, commissioner of the Department of Environmental Conservation, would not say whether the administration preferred the House or Senate version. The administration has supported the House version because it’s easy to implement and generates money next year. The administration is waiting for a final version to emerge from the full Senate before commenting on preference.
Many lawmakers say the per parcel fee could be characterized as a tax, but Lyons said it is a fee.
“No one is paying a percentage of the pollution. And no one is paying based on how much potential pollution has come from that particular parcel,” she said.
Senate Appropriations is expected to discuss Friday how the money in the bill would be spent.
