State Treasurer Pearce: A financial perspective on the water quality issue

NOAA Great Lakes Environmental Research Laboratory

Algae blooms like the one shown here have popped up around Lake Champlain and Lake Carmi, creating a threat to water quality and tourism in Vermont.

Editor’s note: This commentary is by Vermont State Treasurer Beth Pearce.

Clean water is the backbone to Vermont’s economy and is vital to the health and wellbeing of all our citizens. Not only is clean water an essential natural resource – it is also an integral part of our character as a state.

Despite common ground and a consensus from policymakers and citizens that we need to protect and preserve our most precious natural resources, the quality of our waterways has degraded as phosphorus and other pollutants have damaged the long-term health of our lakes and rivers. Lake Champlain and Lake Carmi are painful examples of the status of our waterways. It is time to recognize our current situation as a crisis.

Vote for Vermont/Pat McDonald

State Treasurer Beth Pearce

For years, there has been an intensive statewide effort to understand the clean water challenges we face, to identify a range of possible solutions, and crucially, to determine how to pay for those solutions. The studies have spanned multiple administrations, and include a collaborative effort led by the Treasurer’s Office that resulted in the Act 64 Report, which was finalized in January 2017.

The General Assembly, the Administration, non-profits, businesses, and advocacy groups have studied the problem exhaustively and repeatedly. While continued study is important, what Vermont needs now is action and the courage to make bold policy decisions so that we do not shirk our environmental and financial responsibilities and place them on the shoulders of future generations. The General Assembly and the Administration are now faced with making a policy decision on how to comprehensively address our clean water challenges. Luckily, policymakers have all the information they need to make decisions now. What we do not need is continued study in place of real action.

As it stands, there are two choices: to act or to defer action. We must not defer action.

As your Treasurer, I approach this issue from a financial perspective, so let me lay out the numbers.

Over $2.5 billion is spent annually in Vermont by visitors and vacation homeowners, and much of that is linked directly to the quality of lakes and rivers throughout the state. A Vermont Agency of Commerce and Community Development study showed that in 2013 visitor spending contributed $318 million in tax and fee revenues and supported an estimated 30,000 jobs for Vermonters. In 2015, 37 lakeside properties in one Vermont town had their home values drop by $1.8 million due to declining water quality. The message is clear – the longer we defer action, the greater risk we face of decreased tourism revenue, property values, and further environmental damage.

Beyond the economics, there are real health concerns for Vermonters. Over 42 percent of Vermonters get their drinking water from our state’s lakes, rivers, reservoirs, and streams. Lake Champlain alone provides 154,000 Vermonters with their drinking water, with residents using approximately 20 million gallons a day. Particularly as we look towards the future health and wellbeing of our young Vermonters, we must act now to mitigate future pollution.

So what are the costs? The Act 64 Report identified a long-term funding need of $2.3 billion to fund water quality improvements over a 20-year time span. This includes compliance standards laid out in the Lake Champlain TMDL, as put forth by the U.S. Environmental Protection Agency. Of the long-term funding need, $1.06 billion is funded with existing resources, leaving a gap of $1.25 billion. To meet this need, the Act 64 Report recommended a target of $25 million per year in additional revenue as the State’s contribution, working in partnership with all stakeholders. For 2018 and 2019, the General Assembly adopted a two-year funding “bridge” that reallocated capital dollars to begin addressing this challenge immediately – but that funding runs out next year, and we have yet to adopt a long-term funding mechanism.

While I appreciate the value of additional research and refinement, we should not allow a continued search for the perfect solution to take the place of good, concrete action based on known data. The time to identify a more permanent and sustainable funding source is now. I urge the General Assembly to take action now to make the following decisions:

(1) how do we allocate existing clean water funding dollars;

(2) how do we deliver the services needed to improve water quality; and

(3) how do we generate any dollars that cannot be met with existing revenues?

As reflected in the Act 64 Report, to the extent that existing resources, built into the base budget, are not available, I have been an advocate of an impervious surface or user fee because of their proven nexus with respect to water quality. That said, I recognize that other fees have been included in the current proposed legislation that will only go into effect should the General Assembly fail to come up with and implement an alternate solution. I view these efforts as a demonstration by the House of their commitment to clean water. They recognize the urgency of the situation that we face, and I look forward to the General Assembly moving forward with a comprehensive funding solution with a clear nexus to water quality.

The time to act is now. Like an unpaid credit card bill — the longer we defer action, the more expensive the solution will become.

Our lakes, rivers, and waterways are assets that support our way of life, our property values, our health and safety, and our economy. We need to invest in these assets. Like any investment, early, proactive, and disciplined practices are the key to success. As stated before, we have two options, defer action or take action — we must not miss this opportunity to take action now.

Images courtesy of NOAA Great Lakes Environmental Research Laboratory and Vote for Vermont/Pat McDonald