[S]tate Treasurer Beth Pearce shopped her plan to fund cleanup of Lake Champlain at the Statehouse Tuesday.
Pearce is proposing a per parcel fee that would be assessed on Vermont property owners. The state treasurer says the state needs to collect $25 million a year for 20 years from residential and commercial property owners in order to help fill a large gap in funding for cleanup.
That means state property owners will be on the hook for $500 million of the $2.3 billion estimated cost of lake cleanup. The federal government, which has mandated mitigation of phosphorus pollution that is feeding algae blooms in the lake, has said it will pay a large portion of the total cost.
Legislators are reviewing 64 possible sources of revenue to fill the $970 million funding gap. On an annual basis, the state needs to come up with $48.4 million a year worth of cleanup funds.
The state treasurer says the per parcel fee makes sense because it is tied to the source of pollution — runoff from fields, forests and pavement. The assessment would be put in place by July 1, 2019.
It will be up to lawmakers to decide exactly how to assess the per parcel fee. Pearce has not recommended how the assessment should be applied, but she told lawmakers fees should be collected locally.
Pearce has said previously that the state can meet federal requirements for reducing pollution in Lake Champlain over the next two years without raising new revenue.
Legislators will need to come up with a longer-term solution by the end of that period, she said.
The treasurer’s much-anticipated report, which was issued on Jan. 15, provides a framework for the Vermont Legislature and the Scott administration.
In an interview on Tuesday, Jason Gibbs, the chief of staff for Gov. Phil Scott, said the governor will likely look to free up bonding capacity to make up the difference long term.
Scott said in his inaugural addressthat the state’s share of the cleanup would be paid for through “existing resources” and that taxes and fees would not be raised to fill the gap. Others, including Senate President Tim Ashe, have questioned whether that’s possible.
While lawmakers and state officials may differ over how the cleanup is paid for, everyone is in agreement that something must be done.
Pearce told the House Ways and Means Committee that the value of lakefront property in the town of Georgia dropped $1.8 million in 2015, because of poor water quality in Lake Champlain. St. Albans Bay and Lake Carmi, once popular tourist destinations, are now choked with toxic blue-green algae.
Under state and federal laws, farmers who use fertilizers that contribute to the phosphorus problem, will need to find ways to contain runoff; municipalities are required to re-evaluate dirt road maintenance and in some cases upgrade sewage treatment facilities; developers must mitigate potential runoff from parking lots. All of these efforts are counted in the total cost of the cleanup mandated by the EPA.
For the next two years, Pearce says the state can use existing revenue streams and allocate $30 million through the capital bill to cover $50 million in cleanup costs.
Former Department of Environmental Conservation commissioner Alyssa Schuren, who currently works under Pearce, said an existing surcharge on real-estate sales is not a long-term solution. The fee pulls in around $5 million each year for clean water projects.
The real-estate transfer fee isn’t connected to water quality, Schuren said. The Treasurer’s office recommends sunsetting it in fiscal year 2019. The fee expires in 2018, and Pearce recommends extending it one year.
“People felt a nexus to the problem doesn’t exist there, like it does with an impervious surface fee,” Schuren told legislators Tuesday morning in the House Ways and Means Committee.
In addition to the cleanup fee already in place, the state can use $10 million on a temporary, annual basis from the state’s general obligation bond program.
Transportation infrastructure bonds could also be reallocated, freeing up another $10 million over the next two years, Pearce said.
The short term strategy will fund the most urgently needed phosphorus mitigation efforts, Pearce said.
“My hope is that the administration will be able to work within that framework we’ve provided, and work to get that $50 million over two years without raising taxes,” Pearce said to legislators Tuesday morning in the House Ways and Means Committee.
Once legislators arrive at a dedicated source of long-term funding for the effort, they should leave collection of the revenues and administration of projects to localities, as much as possible, Pearce said. This will create the least administrative “drag,” she said, and will allow localities to effectively prioritize projects according to needs they’ve already identified.
Ashe said Tuesday that senators needed to know more about how the money would be spent before deciding how much and what method should be used to fund the lake cleanup.
He said the choice came down to using existing resources, including the temporary surcharge on the property transfer tax, for the next two years to fund projects and figure out the strategy for the next 18 after that or “does the Legislature say we’re nervous that that commitment won’t be there two years from now to extend this 20-year strategy and therefore we want to bite it all off now.”
Ashe said it made little sense to raise more money than was needed.
“There’s still a lot of confusion in the Legislature about just what we would do with all of this money,” Ashe said.
“Precisely how we would spend tens of millions of dollars a year over a 20-year period is something that I think we have to better understanding about, that will help us make the decision about what to go forward with,” Ashe said. He later added the plans for the first few years of the cleanup were what the Legislature would need, not 20 years worth of projects.
He reiterated that it was critical for whatever cleanup plan is done that it show results within the first few years or the public would not back any long-term funding proposal.
Ashe previously supports a per parcel fee for water cleanup and said it spreads the burden. He said the property tax transfer surcharge did not meet the call of state officials to have an “all-in” approach to clean up costs.
“At the end we had an almost no-one in funding approach,” he said of the property tax surcharge.
