[A] new water quality funding proposal that includes a tiered property tax is under consideration in the Senate Finance Committee as less than two weeks remain before the Legislature is scheduled to adjourn.
The proposal includes a tax on commercial and industrial properties in the Lake Champlain watershed, which covers all towns where stormwater systems drain into the lake.
The tax, known as a per parcel fee, would take effect in 2017 and raise about $4.9 million of the total $6.9 million package. By 2018, the tax would be expanded statewide and combined with a stormwater fee targeted at agricultural runoff, raising a total of about $13 million. The per parcel fee and stormwater fee would increase based on the size of the property.
House and Senate lawmakers want to tie the fee to the amount of pollution created. Previous efforts, including a proposal by the Shumlin administration, have yet to gain traction. The House version of the bill included a study on how to implement a tiered per parcel fee.
Sen. Ginny Lyons, D-Chittenden, developed the funding proposal for the Senate Finance Committee. She said the reason for the gradual expansion of the tax policy is to give the Vermont Department of Taxes time to develop a new collection process. An official with the tax department said they will have to set up a new computer system to collect the tax.
Sen. Michael Sirotkin and the Senate Agriculture Committee have alternative funding proposals as well, both of which include a per parcel fee and raise more than $7 million in fiscal year 2016.
It has been nearly one month since lawmakers discussed water quality funding despite pressure from federal regulators who are seeking a commitment by the state to restore Lake Champlain’s water quality to state standards. One observer said it was because lawmakers are looking for a silver bullet. Another said it’s a tough year to raise money.
The Senate Natural Resources and Energy Committee thought they found that balance in April when the committee voted out a $25 flat tax on all properties combined with fees for pollution permits and farm registration fees. The total package raised $10.3 million in funding for fiscal year 2017.
On the wall in the Senate Natural Resources and Energy Committee room is a whiteboard that reads, “Everybody In. Everybody Contributes.” Many lawmakers say all residents share Vermont’s waterways and should pitch in to keep them clean.
“There is a connection for everyone,” said Sen. Chris Bray, D-Addison, chair of the Senate Natural Resources Committee, citing residents’ dependence on state and municipal roads that channel runoff into the state’s waterways.
“Plus these are the waters of the state. No matter where you live, you might want to go swimming in some lake, pond or river,” he said. “You have a right to expect that those waters be safe and clean and be suitable for recreation, swimming and fishing.”
All property owners pay the same $25 tax regardless of their pollution contribution. Bray said this is fair because large industrial and commercial property owners will have to pay more for stormwater pollution permits. They will also have to pay for a larger number of permits.
Ideally, he said the tax could be adjusted to charge certain property owners more than those that pollute less. But he said the state does not currently have enough data to implement such a program.
“We don’t have the data tools to let us assess a tax at that level of specificity,” Bray said. “I think over time as we improve our ability to assess, fees may be related to actual performance.”
The House version of the bill raised about $7.7 million through a 0.2 percent surcharge on the value of property subject to the property transfer tax and similar fees. The surcharge raised $5.3 million for fiscal year 2014.
The administration’s proposal was to raise at least $5 million in fiscal year 2017 through a tax on commercial and industrial properties. The proposal has received little attention all year.
David Mears, commissioner of the Department of Environmental Conservation, could not comment on the funding proposal in the Senate Finance Committee. He said the administration supported the property transfer tax passed by the House, in part because it would be easy to implement.
Officials at the Environmental Protection Agency have said the state must show it has the resources to reduce phosphorus pollution into Lake Champlain or else it will issue what are expected to be more costly regulations on wastewater treatment plants. Dozens of waterways in Vermont are polluted beyond state standards.