[L]awmakers may have finally hit on a source of funding for the state’s long-term water cleanup efforts: the education fund.
The House Ways and Means Committee has advanced a proposal to dedicate 4% of meals and rooms tax revenues to clean water projects, in S.96. Currently, those tax revenues flow to the education fund.
To backfill the $7.6 million, the committee is proposing a new sales tax on cloud computing software and veterinary supplies. Together, those taxes would raise a little over $7 million.
The committee voted to approve the plan 10-1 Friday. The lone dissenter was Rep. Cynthia Browning, D-Arlington, who said she was anxious about using a new, untested tax source to backfill revenues from the Education Fund, which pays for the state’s pre-K-12 public schools.
“These are new revenues and we don’t actually know what they’re going to be. And so that makes me nervous. To have new revenues, and to still have a shortfall,” she said.
If the proposal to shift meals and rooms taxes ultimately clears the House and Senate, lawmakers will have identified an estimated $14.8 million in dedicated state revenues for clean water.
Gov. Phil Scott had proposed his own six-year plan for funding water cleanup efforts. But key lawmakers had rejected his proposal to use estate and property transfer tax revenues, largely on the grounds that it would divert money from elsewhere in the budget.
Agency of Natural Resources Secretary Julie Moore said she was grateful for the Legislature’s work this session on both clean water policy and funding.
“Absent the money piece, that work just doesn’t hold the same value. And so having both of them move forward together is really essential,” she said.
The EPA, which has ordered the state to address phosphorus pollution, must approve the state’s funding source for clean water efforts. Moore said she “absolutely” believed the committee’s plan would get the EPA’s blessing for 2020.
But Moore and environmental advocates say the tax revenue identified by House Ways and Means won’t be enough. The state will also need to find additional sources of funding over the next few years. ANR anticipates the amount needed in 2024 for dedicated clean water funding from the state will be $25 million to $28 million.
Jon Groveman, water and policy director for Vermont Natural Resources Council, said the House Ways and Means plan was “definitely a step in the right direction.”
“It’s not enough in the long term, but it’s a good foundation to build on,” he said.
Vermont Treasurer Beth Pearce has estimated that the state needs to raise at least $25 million a year to meet federal clean water requirements.
The House plan will likely rankle school officials, who are vigilant about opposing any attempt by the Legislature to dip into the fund for new policy priorities. The $1.7 billion education fund is a tempting place from which to divert money, since whatever is taken out is regenerated through property taxes.
Nicole Mace, executive director of the Vermont School Boards Association, said she appreciated that lawmakers had sought to find replacement funds to compensate for the meals and rooms revenues. But she noted that the education fund was already under pressure this year – the Agency of Education has just reported a $4 million shortfall – and echoed Browning’s warnings about the software and veterinary supply taxes being unpredictable.
“That’s a new tax, the performance of which is uncertain, and so that raises some concerns,” she said.
VTDigger energy and environment reporter Elizabeth Gribkoff contributed to this report.
