Rutland Herald: Rooms & Meals Tax Hike would fund lake clean up

A key legislative committee is recommending $31 million in new taxes and fees annually to clean up Lake Champlain and other Vermont water bodies, prompting a swift rebuke from a Republican governor who said the “baffling” proposal will hurt businesses and “make Vermont less affordable.”

The House Committee on Natural Resources, Fish and Wildlife issued a memorandum this week that uses eight discreet funding mechanisms to pay for a water-quality effort expected to require $1 billion in new revenues over the next 25 years.

The committee generates the bulk of the money — about $19 million annually — from an increase in taxes on rooms, meals and alcohol. The committee recommends a $10 “clean water fee” on motor-vehicle registrations to generate another $6 million a year.

Rep. David Deen, D-Westminster, chairman of the House Committee on Natural Resources, Fish and Wildlife, said the proposed revenue sources dovetail with a tourism industry that’s heavily reliant on the recreational draws of Lake Champlain and other waterways.

Hesaid that makes them an appropriate means by which to fund one of the costliest environmental initiatives in state history.

Taxes on rooms, meals and alcohol would go from 9 percent to 10 percent under the committee’s plan.

“People in the industry might have some concerns about an increased tax jeopardizing their competitive edge,” Deen said. “What I ask them to think about is, imagine what your competitive edge is, and the value of it, if the lake turns green.”

Deen’s rationale has done little to win buy-in from Gov. Phil Scott, whose communications director, Rebecca Kelley, issued a written statement after the committee unveiled its plan Tuesday.

“Gov. Scott has been clear that Vermonters and Vermont businesses cannot afford to pay more and that he will not sign a budget or a bill this year that adds new taxes, fees or surcharges,” Kelley said. “He campaigned on this commitment, and was elected by a strong majority of Vermonters to see it through.”

Kelley went on to say the governor has already signed onto to a plan, initially put forward by State Treasurer Beth Pearce, that creates a two-year, $50 million funding plan for water-quality efforts.

That proposal would solve the water-funding conundrum until July of 2019.

“ Why the Legislature would not take that time to explore alternatives and think creatively, and, instead, instinctively turn to increasing taxes and fees on Vermonters, whether this year or two years down the road, is baffling,” Kelley said.

Deen said he’s “baffled” by the administration’s response. He said lawmakers have spent much of the last two years thinking creatively about the optimal ways to fund waterquality projects that, by all accounts, need to go forward.

“It’s like he wasn’t in this building over the last two years,” Deen said. “We have an expiring revenue source coming up — he knows that — and we are looking to replace it.”

Scott’s own Natural Resources Secretary Julie Moore acknowledged the need to come up with a longer-term funding plan. And she said she agrees with lawmakers that revenues on the order or $25 million or $30 million a year are needed to address water pollution issues.

But Moore said there may be ways to use “existing financial resources and instruments” to pay for some of that work. And Scott on Wednesday said he doesn’t share lawmakers’ immediate urgency to decide where exactly the money will come from.

“I think this is premature,” Scott said.

For instance, Scott said an electric transmission line proposed to run from Quebec to the Boston area — it would go under Lake Champlain and through Vermont — might be coming online more quickly than anticipated.

The owner of that line will pay Vermont for the right to run it through the state, if the project goes through.

Scott said that by his calculations, Vermont could see new revenues of “at least $15 million a year” from that project, “which is significant when you think about the total needed to be spent.”

Scott said there’s also a chance that increased revenues from the federal government could obviate the need for Vermont to raise water quality funds through state taxes.

“We’ve been hearing more and more about an initiative of late to spend upwards of $1 trillion over the next few years for infrastructure improvements,” said Scott, referencing a plan touted by President Donald Trump.

“What that will entail is unknown,” he said. “It could be for capital projects surrounding storm water and maybe lake cleanup – we just don’t know.”

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