On Wednesday, Treasurer Beth Pearce panned a recommendation by a Scott administration-led group to use existing state construction funds to pay for phosphorus reduction efforts over the next several years.
Pearce said it is not “feasible” to use exclusively capital budget money to fund taxpayers’ share of the cleanup efforts for an upcoming five-year period of the 20-year effort. “No more than half” of the $25 million should come from bonding, she told VTDigger.
Last month, a working group recommended funding Vermonters’ share of pollution control projects from fiscal 2020 through 2024 with $22 million a year in capital budget funds. The draft proposal from the group, which is led by Agency of Natural Resources Secretary Julie Moore, Agriculture Secretary Anson Tebbetts and Tax Commissioner Kaj Samsom, did not include a new revenue source to pay for the phosphorus reductions mandated by the federal Environmental Protection Agency. The working group will release a final report to lawmakers on Nov. 15.
Earlier this year, Pearce outlined 64 funding proposals that could raise $25 million a year, including a fee on land that got mixed reviews from lawmakers.
The state treasurer said in an interview last week that the Scott administration and the Legislature should again consider some form of per-parcel fee.
Pearce emphasized that time is running short and lawmakers must come up with a solution this legislative session. She has told lawmakers that bonding for the entire cost of lake cleanup is a short-term solution that would get the state through this year and next, but the Legislature must come up with a long-term source of funding from new and/or existing revenues that will carry cleanup efforts through the next 20 years as required by the Environmental Protection Agency.
The Legislature took no action this year on developing a long-term funding solution. Instead, it required the working group to submit a report that included “draft legislation to establish equitable and effective long-term funding methods to support clean water efforts in Vermont.”
In an interview Wednesday, Pearce rejected the working group’s preliminary proposal to pay for the state’s share of the cleanup through 2024 almost entirely from the capital budget. She said there were already significant demands on those funds. She said the idea was also impractical because the state plans to continue reducing how much it borrows. In the past four years, the annual amount of borrowing has gone down 18 percent, she said.
“Relying totally on the capital budget” to fund the cleanup projects through 2024 “is not a feasible approach,” Pearce said.
Pearce outlined her concerns to the group in a Nov. 1 letter. Administration officials said Thursday they appreciated the treasurer’s concerns as they complete the final report.
After a lawsuit by an environmental group, the EPA required Vermont to reduce the phosphorus levels that contribute to toxic blue-green algae blooms. In response, the Legislature passed the Vermont Clean Water Act in 2015. The only revenue source included then was a temporary surcharge on the property transfer tax. A long-term funding solution was put off.
Pearce said there was “urgency” for the Legislature to develop a long-term plan in 2018 to fund the $25 million a year cleanup program. There was enough money in the capital budget, she said, to cover cleanup projects this year and next, but not in the third year and beyond. Money was freed up in the capital budget in this biennium because of project delays, she said. Those projects will need to be funded in future years, she said.
Pearce also implored lawmakers Wednesday to set up a system next year to collect the money, such as stormwater utilities, which have been established in some communities.
According to Pearce, using the capital budget to pay for some of the cleanup makes sense — given the importance of the lake for tourism, a $2.5 billion a year industry that generates $300 million in taxes and fees.
“Given that capital dollars will be scarce and that bonding level authorizations will likely continue to decline, I believe that it would be prudent to estimate that no more than half of the current proposal included in the draft Act 73 report could be supported by capital dollars over the 20-year time period,” Pearce said.
The capital budget passed this year calls for spending of about $73 million on all state projects for this fiscal year.
“This is a rough estimate and has to be considered in the context of all of the needs as a part of the capital bill process and is ultimately the decision of the General Assembly and the governor,” Pearce added.
Pearce said lawmakers could also cut programs or reallocate regular budget funds instead of raising new revenue, but the treasurer said whatever source of funds is tapped must be “predictable, reliable, and built into the base budget.”
Gov. Phil Scott has said he wants to pay for the cleanup with “resources from within” and said in his inaugural address he would not raise taxes or fees. In August, he reiterated that view, but also said he “would not rule out anything at this point,” including new taxes.
Scott and lawmakers hope to get some cleanup money through payments from the development of a power line under Lake Champlain.
Scott’s spokesperson, Rebecca Kelley, said the governor appreciates Pearce’s input and emphasized that the capital bill recommendation “was not meant as a long-term solution for clean water, but to provide more time to continue its work and get this right.”
“The governor expects the working group will take all input into consideration as it continues its work and puts forward its final recommendations,” Kelley said. “As the governor has said, he’s committed to finding long-term funding solutions to achieve our clean water goals, and is confident we can do so in a way that is fiscally responsible and affordable for Vermonters.”
Moore, the natural resources secretary, said the working group has continued to solicit feedback during a public comment period.
“It is not the intention of the working group to leave folks with the impression that relying on the capital bill at current (fiscal 2018) levels was a viable, long-term funding source to support clean water work,” Moore said.
“As we’ve worked to revise the report based on feedback we received from working group members, the Advisory Council – including the treasurer – and other stakeholders, it was obvious that greater clarity on this point is needed,” Moore said. “We fully recognize that the state has many demands for its limited supply of capital dollars, water quality being but one of them.”
“I don’t believe our ultimate recommendations for moving to a long-term funding solution will be at odds with the treasurer’s” view, Moore said.
