Bray suggests a per-parcel fee to fund clean water; state officials differ on payment plan

MONTPELIER — Debate in Montpelier surrounding efforts to clean up the state’s waterways has been surging like the Otter Creek in April, but legislative action on funding for those efforts has been moving at a glacial pace.
With that in mind, Sen. Chris Bray, D-New Haven, is suggesting Vermont adopt a per-parcel fee that would yield $18.8 million of the estimated $30 million the state will need to raise during each of the next 20 years as its share of a federally mandated, $2.6 billion cleanup of Lake Champlain and related waterways.
“Vermonters want clean water, faster,” Bray said. “We owe it to them to figure out how to get it done.”
State officials in 2015 approved the Clean Water Initiative (Act 64), aimed at addressing federal concerns about pollution in Vermont’s waterways. Federal authorities regularly call upon states to develop “Total Daily Maximum Load (TMDL)” thresholds for their impaired waters. TMDL identifies the maximum amount of a pollutant that a body of water can receive while still meeting water quality standards.
While state officials have zeroed in on the water quality problems and potential solutions, they have yet to agree on a 20-year funding plan for the work that needs to be done. Individual lawmakers have sought to protect their respective constituencies as much as possible from the sticker shock. Business groups have lobbied against suggestions the commercial sector bear a larger proportion of the water quality improvements. Farmers have also voiced concern about being targeted as a result of fertilizer runoff. And Gov. Phil Scott has made clear his disdain for any increases in broad-based taxes or fees.
The state Legislature this past session created a six-member Working Group on Water Quality Funding, through Act 73. Chaired by Secretary of Natural Resources Julie Moore, the group was tasked with evaluating existing resources, and drafting legislation “to establish equitable and effective long-term funding methods to support clean water efforts in Vermont.”
Lawmakers also approved an advisory council to assist the working group, which released its report on Nov. 15. The panel offered five recommendations, including:
•  Use existing state revenues and resources to fund clean water through fiscal year 2021.
•  Allow clean water priorities “to guide how costs are shared across sectors.”
•  Establish approaches for collecting revenue and delivering services that are “environmentally efficient and cost effective.”
•  “Pursue technological and regulatory innovation — including commoditizing phosphorus, developing flexible financing, and leveraging integrated planning and permitting models.”
•  “Commit to adaptive management.”
Bray — who chairs the Senate Natural Resources & Energy Committee — commended the working group’s efforts, but noted the panel fell short of fulfilling its mission.
“What they came back with is, ‘Here are some things we think the Legislature might want to look at,’ but no recommendation,” Bray said. “To be direct about it, they did not meet the charge that was given to them.”
So Bray — in an effort to spur discussion and other ideas — has decided to pitch the notion of a per-parcel fee. He is now polishing his proposal, which he will introduce through a bill he will file next month when the 2018 legislative session gets under way.
The per-parcel fee, Bray reasoned, epitomizes the General Assembly’s consensus of “everybody in, everybody pays” when it comes to a critical, universally used resource like water.
Bray took several facts and figures into consideration as he developed his proposed per-parcel fee.
The average Vermont household size is currently 2.4 people, and there are roughly 360,000 parcels in the state, according to Bray. So a statewide per-parcel tax of $1 per month would yield $4.4 million. Raise it to $1 per week per parcel — amounting to $52 per year for the landowner — and it would yield $18.8 million annually, according to Bray.
Combine that $18.8 million with another $12 million each year from the state’s capital bill and you’ve arrived at what Bray calls Vermont’s annual $30 million “lift” for water quality programming.
“(Senate) Finance and Appropriations (committees) will sort out the money,” Bray said. “But I felt the only responsible thing for me to do was if I’m going to bring forward a request to do clean water work, at this scale, for the long term, I owed it to everyone to put a proposal on the table. So that’s what my bill does.”
He believes the per-parcel fee could be collected economically and without a lot of new bureaucracy.
“When developing tax policy, you want it to be fair, transparent, to have a connection to who’s being taxed and who’s getting a benefit out of it,” Bray said. “And you want it to be efficient; you want to have a way of collecting it that isn’t too expensive.
“Towns already have a list of all the parcels in town and send people bills,” Bray added. “There’s a property tax and an education tax and other things. This bill says, per parcel, let’s collect the money through that (local tax) bill. Add a new line item to it. It’s not too expensive to simply adjust an existing mailing, an existing bill that goes out to Vermonters.”
Bray’s bill would also create a new state utility that would determine financing and programming for Vermont’s clean water efforts going forward. He reasoned a utility, as a non-political entity, should be in charge.
“Utilities in Vermont have a very rigorous budgeting process that is relatively free of politics, and they are always looking long-term,” Bray said. “And we have a long-term need and a long-term legal commitment to clean water that we need to fulfill.”
That utility, Bray added, could consider ways of adjusting the water quality fee so that it applies more rigorously to parcels that tend to be most responsible for water pollution. These are often parcels with impervious surfaces, that host buildings with expansive roofs, that offer large parking areas occasionally serving leaky vehicles, and farmland close to waterways. So the utility could consider a higher per-parcel fee for properties possessing some, or all, of the aforementioned attributes affecting to water quality.
“The ideal thing for water is to let it soak into the ground,” Bray said. “It’s when it runs off that we have all these problems. The water is going to go somewhere.”
And a lot of it is flowing into streams, rivers and lakes, taking impurities with it, he noted.
A 10-year veteran of the Legislature, Bray is prepared for some criticism of his proposal. Talk of raising revenues is always unpopular — especially now, during tough financial times. The Vermont Agency of Administration’s budget report for October indicated cumulative General Fund revenues were down $12.43 million, compared to the same time last year.
Bray’s plan has met with skepticism from some members of the working group.
The working group considered four options for administering either a per-parcel fee, or an impervious surface fee. Those options included billing/collection done by the municipality, state, “parallel systems,” or by a local or regional storm water utility.
The state of Vermont already pays communities a combined total of more than $5 million for help in collecting the statewide education property tax so collection of a separate fee could exact a similar toll, according to the working group’s report.
Group members also considered a Vermont League of Cities & Towns estimate that it could cost between $1.76 million and $6.775 million to create a new storm water billing system in each of Vermont’s 246 municipalities.
The group acknowledged Bray’s suggestion that the fee be added as a line item to existing bills, but is not sold on the idea.
“It was mentioned that placing a storm water fee as a separate line on existing property tax bills could be a less-costly option, result in higher compliance rates, and could be paid through escrow accounts resulting in less paperwork for property owners,” the report states. “However, since a storm water fee is not a tax, it was also noted that placing a storm water fee on property tax bills may cause confusion.”
The Water Quality Funding Working Group’s report can be found, in its entirety, at tinyurl.com/yam27hrz.
“Based on the current set of assumptions about the amount of revenue that needed to be raised, we were concerned that the administrative fees could be disproportionately large,” Moore said during a Tuesday phone interview with the Independent. “We were assuming the revenue target was on the order of $20 million to $25 million, based on work documented in the treasurer’s water quality funding report … We found the administrative costs could run as high as 20 or 25 percent of the total amount of revenue that needed to be raised.”
This is one of the main reasons why the working group has recommended a deeper dive into how a storm water fee could be collected at a lower administrative cost, according to Moore.
In the meantime, Moore believes Vermont will be able to meet its Clean Water Initiatives through 2021, using funding from the property transfer tax, the state’s capital bill, and revenue through what she described as “some competitive federal grant opportunities.”
Moore added Vermont could soon receive more than $5 million annually as an impact fee from the TDI Clean Power Link project that calls for installation of electric power lines under Lake Champlain.
She also believes state officials could use more time to map out specific water quality programs.
“We think there’s a need to think further about service delivery, so we’re not just raising the money and have a better idea of what you’re going to do with it once you’ve raised it,” Moore said.
Bray has yet to discuss his plan with his Senate Natural Resources & Energy Committee colleagues, but he looks forward to that conversation.
“I think, informally, there’s a shared sense of ‘We have been doing too little, and we have to step up and do more,’” Bray said.
“There is no cheap, easy answer.”
Reporter John Flowers is at [email protected].

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