After considering a variety of new taxes to fund water quality efforts in Vermont, lawmakers now say they can clean up the state’s waterways without raising a dime.
Lawmakers have spent the past four years trying to find a long-term funding mechanism for a water quality initiative that’s expected to cost about $2 billion over the next 20 years. As recently as last week, they were contemplating several revenue proposals, including a sales tax on certain services offered by technology companies.
But lawmakers changed tack this week after fiscal analysts projected a year-end budget surplus. Senate President Pro Tem Tim Ashe said stronger-than-expected state revenues have obviated the need to raise taxes for water quality.
“Our strategy is never to be ‘tax first, figure out how to spend it later.’ If the dollars are available to meet the needs, then that’s great,” Ashe said Tuesday.
It’s a remarkable turnabout for a Legislature that had, until recently, criticized Gov. Phil Scott’s proposal to pay for water quality activities with existing state revenues.
Ashe said news of the surplus has altered the fiscal landscape, and he said that’s allowed lawmakers to solve their water quality dilemma without raising new taxes.
“Anyone who observes the legislative process knows that any new revenue source that’s put on the table is vehemently opposed by some constituency,” Ashe said.
Tom Torti, president of the Lake Champlain Regional Chamber of Commerce, said lawmakers should endure that opposition and create a new revenue source for water quality funding.
Torti said the plan approved by Senate lawmakers Tuesday doesn’t address water quality funding needs beyond the next fiscal year.
“It’s, you know, literally the old saying of moving the deck chairs on the Titanic,” Torti said.
Now, legislation approved by the full Senate on Tuesday technically does create a long-term revenue source for water quality funding: It does so by changing state law, so that 6% of the existing rooms and meals tax will now go to a clean water fund every year.
Lawmakers want to use the revenue surplus this year to backfill the $8-million hole that the reallocation will create in the general fund budget next year. In the following fiscal year, the rooms and meals tax reallocation will set the general fund back by $12 million.
However, Torti said, there’s no guarantee that surpluses will be available to fill that gap.
“You can’t do this in one-year tranches,” Torti said. “It is feckless fiscal policy.”
Torti’s own organization lobbied heavily against some of the water quality tax proposals floated by lawmakers this year. He said he prefers a per-parcel fee on every landowner in the state, a proposal that has failed to gain traction in the Legislature.
Calais Rep. Janet Ancel, who chairs the House Committee on Ways and Means, said the revenue jump that fueled the surplus this year is not a one-time phenomenon.
Ancel said analysts think Vermont will see ongoing revenue jumps of about $15 million annually — not just in the next fiscal year, but into the future. She said that ongoing revenue growth mitigates the risk associated with the Legislature’s approach.
“If there’s money available in fiscal [year] ‘20 and ongoing that we feel reasonably assured about, I think it’s a reasonable solution,” Ancel said Tuesday.
Jon Groveman, with the Vermont Natural Resources Council, said his organization is happy to see lawmakers allocate increased funding for water quality activities, but he said the decision not to create a new revenue source to pay for it makes that funding tenuous.
“So if there’s a gap in the budget or we hit a recession, you know, there’s going to be pressure to reallocate that money,” Groveman said. “That’s the reality of it.”
The Scott administration has yet to weigh in on the Legislature’s latest funding plan.