[T]reasurer Beth Pearce urged legislative leaders Tuesday to agree this year on a long-term funding source for clean water projects.
The letter comes on the heels of House approval of a “cloud tax” to help fund clean water projects, an approach the Senate president said he will not support.
“No funding source will be without controversy,” Pearce wrote. “However, it is critical to identify a long-term funding source now so that future generations are not saddled with the added and unnecessary costs of delay.”
Ashe said in an interview Wednesday that the email he sent on Saturday reflected his personal views expressed to a constituent, not those of the entire Senate.
He said that the Legislature remains committed to “dramatically increasing” the amount of money going toward clean water projects. Ashe added that Pearce has sent a similar letter to lawmakers each year.
“The Treasurer has the advantage of not facing veto threats,” he said, referring to the Scott’s opposition to new revenue. “So we have to actually write the bills and get them the votes and make sure that the Governor will sign them.”
House Speaker Mitzi Johnson, D-South Hero, responded: “I share the Treasurer’s concerns that the Administration and General Assembly need to take real, measurable action this year. That’s why the House took another substantial step in fulfilling our long-term funding needs.”
Vermont remains under federal pressure to reduce phosphorus pollution in Lake Champlain and other bodies of water. Since the 2015 passage of Act 64, Vermont’s Clean Water Act, the state has used short-term sources — like appropriations from the capital bill — for the majority of its share of the funding.
Last year, the EPA gave Vermont a “provisional pass” on its Lake Champlain report card for not identifying a long-term clean water funding source. In a 2017 report, Treasurer Beth Pearce said that the state needs to identify a way to come up with $25 million annually for clean water projects.
The governor has proposed using revenues from the estate tax — $8 million next year and as much as $13 million in years to come — to meet the clean water funding gap. In addition, Scott would step up the amount coming from the property transfer tax.
Key lawmakers in the House and the Senate, however, raised concerns about the administration’s plan to take money from the general fund to pay for clean water.
Last month, the Senate passed a clean water bill, S.96, that would change how work is funded throughout the state. But they left it up to the House to come up with the roughly $8 million needed this year to meet long-term pollution reduction goals.
The House approved a plan last week to divert 4% of the rooms and meals tax that currently goes to the ed fund — about $7.6 million — to clean water.
To replace the money from the education fund, House members moved to levy a tax on cloud software: software programs stored and accessed by users over the internet. Fiscal analysts said the new tax would generate about $6 million in revenue.
Pearce calls the clean water policy work done by the Senate this session “an important step forward.” She also acknowledges that lawmakers have established “some dedicated funds” in past sessions to clean water, such as unclaimed bottle deposits.
“But more is needed, and it is needed now,” she writes.
Pearce gives a nod to the House for approving a new dedicated source for clean water funding —- though she says their plan does not go far enough to reduce the state’s reliance on capital dollars for clean water. The capital bill, H.543, as passed by the House dedicates $12.1 million in fiscal year 2020 — and $13.9 million in fiscal year 2021 — to clean water projects.
The treasurer’s letter comes days after Senate President Pro Tem Tim Ashe sent an email to Vermont business leaders stating that he does not support the cloud tax. And on Tuesday, Doug Farnham, policy director and economist at the Vermont Department of Taxes, told members of Senate Finance that the Scott administration opposes the cloud tax.
He said that with new revenue streams for the education fund, including a tax on third party online marketplaces, like Amazon and Etsy—which is estimated to bring in $13.4 million—lawmakers don’t need to find additional dollars to replace rooms and meals tax revenue.
Sen. Finance Committee chair Ann Cummings, D-Washington, said in an interview Wednesday morning that her committee is still reviewing S.96 and has not yet settled on a funding plan.
“No decisions have been made,” she said.
“I have checked that with leadership, and we are perfectly free, if we do not do that tax, then we need to come up with another source of funding for clean water,” Cummings added.
Kit Norton contributed reporting.
