Committee reviews fiscal note for H.41; deadlines extended, Clean Water Board directed to prioritize municipal stormwater funding

The Senate Natural Resources & Energy Committee on April 18 reviewed the Joint Fiscal Office fiscal note for H.41 (as passed by the House), focusing on four categories of fiscal impact: municipal impact fee authority, maintenance of the clean water surcharge, new grant priorities for municipal stormwater implementation, and a small study commission to examine regional stormwater utility districts.

The Joint Fiscal Office summary, read by Ted Barnett of the Joint Fiscal Office, said: "As passed by the house, there are essentially kind of 4 buckets of fiscal impact to the state that this bill promotes," adding that the bill would authorize municipal impact fee assessments, preserve the current clean water surcharge rate and its 2039 sunset removal, direct the Clean Water Board to recommend $5,000,000 in fiscal 2027 and at least $1,000,000 annually thereafter for municipal stormwater implementation, and authorize the municipal stormwater implementation program to make grants to municipalities for compliance with the 3-acre rule.

Why it matters: the changes affect who pays for stormwater management and when projects must be completed. The committee heard that extending compliance deadlines shifts the timing of revenue and construction needs, that municipalities assuming legal responsibility for stormwater systems could reduce annual operating fee revenue currently received by the Agency of Natural Resources (ANR), and that funding priorities will shape which projects can proceed to construction.

Major points of the fiscal note and bill language

- Deadlines: H.41 would extend the compliance deadline for properties subject to the 3-acre permit. For Lake Champlain and similarly impaired watersheds the date moves from Oct. 1, 2023, to Oct. 1, 2028; for other permittees the deadline moves to 2038 or no later than five years after a stormwater-specific waste‑load allocation is established for that watershed, whichever comes first. The Joint Fiscal Office said the deadline changes affect timing but are not expected to substantially change ANR’s operating permit fee revenues.

- Clean water surcharge: The bill would maintain the current clean water surcharge at 0.22% and remove the 2039 sunset. Department of Taxes figures cited in committee showed the surcharge generated about $6.9 million in the first eight months of fiscal 2025, the Joint Fiscal Office said.

- Grants and priorities: Section 6 would allow the developed lands/municipal stormwater implementation program to provide grants for municipal and privately owned 3‑acre sites; section 7 would require the Clean Water Board to recommend at least $1,000,000 per year to the municipal stormwater implementation program going forward; section 8 would direct the Clean Water Board to recommend a one‑time $5,000,000 appropriation in fiscal 2027 for implementation support.

- Study commission: The bill would create a study commission to examine regional stormwater utility districts. The commission’s per diem and expense reimbursements were estimated at approximately $6,000 and no specific appropriation was included in the House-passed version.

Committee concerns and discussion

Committee members and agency staff asked for clarification on how municipal adoption of full legal responsibility for stormwater systems would alter fee calculations (for example, reducing the acreage base on which fees are assessed for MS4 permits) and on the scale of the Clean Water Fund. The Joint Fiscal Office said most Clean Water Fund revenue is variable; fiscal 2026 revenue recommended by the governor was cited at about $28.9 million with appropriations in the $24.8 million range, and committee speakers noted other capital appropriations also support clean water work.

Committee members and ANR staff pressed for clearer public guidance and technical assistance. Kevin Burke, former program manager (ANR/DEC), urged expanded outreach and suggested feasibility reviews and on‑the‑ground engagement for difficult residential subdivisions, saying those steps could help identify when treatment is feasible on site, when municipal participation would be required, and when offsets would be appropriate. Burke said targeted engineering engagement and case‑study sharing could produce creative, lower‑cost solutions for neighborhoods.

Several members asked ANR to produce plain‑language guidance explaining the feasibility analysis process and what an offset is, with examples and case studies, and to make clear that ANR provides technical assistance to municipalities, homeowners and developers. Committee members discussed directing ANR in statute to provide technical assistance for 3‑acre compliance, but expressed a preference for guidance that remains flexible rather than overly prescriptive.

Funding prioritization and housing

Committee members discussed whether available Clean Water Fund and grant dollars should explicitly prioritize housing — especially owner‑occupied primary residences and projects that preserve or create affordable housing — and how to define and verify eligibility. Staff cautioned that existing data sources do not always identify whether a permitted property will be used for affordable housing, condo units, or commercial rental housing; participants discussed possible approaches such as prioritizing projects partnered with municipalities or allowing applicant self‑certification of primary‑residence status.

Next steps

Legislative counsel circulated an updated draft that included a repeal/effective date provision for the $1,000,000 minimum municipal allocation; committee members discussed moving that repeal date from 2028 to 2032. Committee members asked ANR and the Joint Fiscal Office to provide follow‑up materials: a plain‑language feasibility/offset guidance document, documentation of Clean Water Fund revenues and past appropriations, and examples or case studies of municipal participation and regional approaches. The committee also requested that the study commission examine regional utility models and lessons learned from other states.

The committee did not take a formal vote on H.41 during the session; staff and counsel indicated they would circulate revised draft language and return with additional materials at a subsequent meeting.