Senate Committee’s Proposal to Fund Clean Water Evaporates

The Vermont legislature adjourned for the week without resolving one of the issues that has been befuddling it all session — how to pay for clean water.

After a robust debate Friday morning about the wisdom of raising millions annually by increasing the rooms and meals tax by 1 percent — a plan vigorously opposed by Scott administration officials and tourism interests — the idea fizzled out by afternoon in the powerful Senate Finance Committee.

Instead, the panel used up its dwindling end-of-session time to revisit the “cloud tax” on software purchases that the House proposed and passed last week.

The committee eventually took a break, at which point chair Sen. Ann Cummings (D-Washington) went behind closed doors to update Senate President Pro Tempore Tim Ashe (D/P-Chittenden) on the proceedings. After the better part of an hour, Cummings reemerged around 4:30 p.m. and announced the committee would take no vote on the issue before Monday.

While it had been known for two days that the legislature would likely need to return next week to finish its work, the fact that such a high-profile priority would remain unresolved this late in the game surprised some Statehouse watchers.

Sen. Randy Brock (R-Franklin) noted that a delay until next week might make it harder for a funding bill to pass if the House cannot muster the votes to speed up the process by suspending legislative rules.

“They may have those votes, they may not,” Brock said.

The indecision and delay followed what appeared to have been a breakthrough the previous day, when Sen. Brian Campion (D-Bennington) announced “Clean water: Funded,” after the finance committee proposed the rooms and meals tax solution.

The declaration seemed to suggest the panel agreed for the first time this year to a source of revenue to pay for Vermont’s $50 to $60 million annual obligation under the federal Clean Water Act.

On Friday afternoon, however, Campion said he didn’t recall suggesting a deal had been reached, and stressed that he was “ambivalent” about the idea.

Perhaps his change of heart was related to barbed remarks aimed at Campion from Vermont Department of Tourism and Marketing Commissioner Wendy Knight earlier that morning.

She began her testimony Friday expressing regret about the committee’s latest proposal.

“I have failed to convey to the committee, and maybe the Senate, how important tourism is to the economy of Vermont and to Vermonters,” Knight said.

She noted that the state’s $2.8 billion tourism industry generates $391 million in tax revenue for the state. But the state has a relatively small tourism budget — just $3 million, compared to $9 million in New Hampshire, $15 million in Maine and $50 million in New York, she said.

Then she turned to Campion and said his “ears must be ringing” because the “large and vocal sector” of the tourism industry in Bennington County is always telling her that they feel the state isn’t doing enough with the funds it has now.

“I don’t imagine they are very happy about this proposal,” Knight said.

“Well, thank you for pointing that out,” Campion said with an awkward chuckle. “I’ve also heard from constituents that they want the waters of the state cleaned up.”

The exchange highlighted the tension over the fate of one of the last unresolved end-of-session legislative priorities.

After reading media reports of the rooms and meals tax proposal, a number of tourism officials turned out to try to beat back the idea. Most argued it would be unfair to have the tourism industry shoulder a burden the whole state should bear, and that such an increase would hurt business.

“Clean water is obviously very important to our state, but making our industry less competitive in a very competitive market may have the unintended consequence of reducing revenues,” Molly Mahar, president of the Vermont Ski Areas Association, testified.

Sen. Chris Pearson (P/D-Chittenden) seemed unconvinced. He noted that some communities such as Burlington have increased their rooms and meals tax from 9 to 10 percent with no apparent ill effects.

“I’m not hearing any evidence that it’s been terrible for those areas or had any negative impact,” Pearson said.

Tax Commissioner Kaj Samsom urged the committee, absent compelling data, to use its common sense to recognize that any tax increase would have an effect on people’s behavior, whether it’s people planning a ski vacation or weddings or just families going out to dinner.

“I think it’s important to acknowledge that going from 9 percent to 10 percent doesn’t sound extreme, but there is absolutely an impact,” Samsom said.

Disclosure: Tim Ashe is the domestic partner of Seven Days publisher and coeditor Paula Routly. Find our conflict-of-interest policy here: sevendaysvt.com/disclosure.

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