McQuiston: Paying For Clean Water

Feb 14, 2017

The general reaction to Treasurer Beth Pearce’s suggestion that the state cover about a quarter of the massive costs of cleaning up Vermont’s waterways with a de facto increase in the property tax was a collective WHAT???

In a report released in mid-January, Pearce noted that the 20-year total clean water compliance costs are estimated at two point three billion dollars. Revenues for this purpose during that time period are projected at slightly more than one billion, leaving a 20-year total gap of one and a quarter billion dollars.

Even allowing for other revenue sources, Pearce estimates the General Fund cost to average taxpayers will likely be a tidy $25 million or so a year for those 20 years.

That may still be optimistic, but for now, let’s assume it’s correct.

The Legislature could design a complicated funding formula by using several revenue sources to fill the twenty five million dollar gap. You know - spread the pain around to make it “fair.”

But this would require assigning values to things like impervious surfaces of driveways, roofs and parking lots. It’s enough to make the eyes glaze over, and almost guarantees legal challenges and administrative overhead – at a time when nobody wants another bureaucracy.

A one percent increase in the personal income tax rate would raise just over thirteen million. But as a candidate, Governor Scott vowed not to raise taxes. So even if he were drowning in red ink it’s doubtful he’d reach for the Personal Income tax to save his life.

That leaves using property.

A flat fifty dollar per parcel fee would raise nearly seventeen million. Considering that someone might have a thousand acres and someone else a one-quarter acre lot, it’s not very fair, but 50 bucks a year tacked onto a property tax bill is still only 50 bucks.

And everyone would share in the cost of cleaning up the shared benefit of having cleaner water.

Simpler still, and maybe more fair, would be to add a little bit to the statewide property tax rate. Pearce’s report states that adding one penny would raise $8 million. So we’d just multiply pennies until we got the number we need. The property tax is also deductible, so the federal government would be helping out a little bit too.

And so far, Governor Scott’s reaction to using property is that “Everything has to be on the table.”