Ways & Means backs H.481 to keep clean-water surcharge, amend 3‑acre stormwater rules

The House Ways & Means Committee on H.481 voted to report the bill favorable after hearing testimony that it would repeal the scheduled sunset of the property transfer tax clean water surcharge and make multiple changes to state stormwater permitting and funding.

Michael Grady, legislative counsel with the Office of Legislative Counsel, told the committee that section 2 of H.481 repeals the staged sunset on the clean water portion of the property transfer tax surcharge so that the surcharge remains in effect at its current rate of 0.22 percent. He said related changes in sections 3–5 remove statutory language that assumed the surcharge would be reduced or end in 2027 or 2039.

The bill also changes the state’s 3‑acre stormwater permit regime. Grady said section 1 extends deadlines for properties subject to the 3‑acre rule: owners in the Lake Champlain and Lake Memphremagog watersheds would have until Oct. 1, 2028, to reach compliance, and owners elsewhere would have until Oct. 1, 2038. The committee’s fiscal analyst later confirmed the later statewide date moved from 2033 to 2038.

H.481 creates or expands municipal financing options to help subdivisions comply. Section 6 converts an existing grant program into a broader financial‑assistance program that can include loans and subsidy mechanisms, and a municipal stormwater implementation program would be available to municipalities that assume full legal responsibility for subdivision stormwater systems. The bill directs the Clean Water Board to recommend at least $1,000,000 annually for that municipal program and includes a $5 million appropriation in fiscal 2027 for municipal compliance with the 3‑acre permit.

Neil Kamen, deputy commissioner of the Department of Environmental Conservation, told the committee the property transfer tax surcharge (the PTT) is a significant revenue source for the Clean Water Fund; Joint Fiscal Office figures supplied to the Clean Water Board project roughly $8.52 million from the PTT in the current fiscal year. Kamen said small regional groups and conservation districts rely on fund revenues and that eliminating the PTT would cut “about a quarter to a third of, actually, a little bit more than a third” of total Clean Water Fund revenue.

Joint Fiscal Office staff outlined the revenue implications. James Duffy said extending the 3‑acre compliance dates is not expected to materially change state agency revenue, but allowing municipalities to assume legal responsibility for stormwater systems could shift some permit revenues from state permit funds to local collections. JFO estimated those effects on the Environmental Permit Special Fund would likely be small — under 2 percent of that fund’s receipts. JFO also noted the clean water surcharge repeal would preserve current Clean Water Fund inflows; a housing bond tied to the surcharge is scheduled to be paid through 2028.

Committee members pressed on implementation details: Representative Valdez asked whether the 3‑acre rule has proven cost‑effective for phosphorus reduction, and Grady and DEC staff responded that the 3‑acre reductions are part of the EPA‑approved TMDL and that removing the requirement would require EPA approval of alternative load reductions and could expose the state to federal enforcement authority.

Representative Kimball asked what “financial assistance” means; DEC and JFO explained the program can include low‑ or zero‑interest loans plus subsidy mechanisms so municipalities and homeowners are not faced with immediate large capital assessments. Grady and DEC described municipal examples including school districts and fairgrounds that have sought or received funding to reach permit standards.

Representative Kimball moved that the committee find H.481 favorable "as it came to us." The committee recorded a unanimous favorable report: yes votes from Senator Channing; Representatives Burkhart, Feltes, Higley, Holcomb, Kimball, Maslin, Ode, Wasozak, Canfield and Kornheiser (11–0–0). Representative Ode was designated to report the bill out of committee.

The bill does not change the 3‑acre technical standards themselves; rather it adjusts timelines, funding priorities and municipal authority to levy fees and assume system responsibility. If enacted, the statute will require the Clean Water Board and Agency of Natural Resources to implement the new grant/loan program and to recommend the yearly $1,000,000 priority funding for municipal stormwater implementation.

The committee’s action sends H.481 to the next step in the legislative process with a unanimous favorable report.