Senate committee hears DEC overview of water funding, SRF prioritization and housing links

The Vermont Senate Committee on Institutions and Information Technology on Thursday, Feb. 6 heard a briefing from Department of Environmental Conservation officials on how water and wastewater projects are funded and prioritized in the capital bill and state revolving funds.

The department’s deputy commissioner, Neil Kammin, and Eric Blatt, director of engineering in the Water Investment Division, told the committee that two federal and state revolving loan funds — the Clean Water State Revolving Fund (SRF) for wastewater and stormwater and the Drinking Water SRF for public water systems — remain the primary financing tools, supplemented by one-time state capital, American Rescue Plan Act dollars, and federal programs such as the Bipartisan Infrastructure Law (IIJA/BIL).

Why it matters: Kammin said water and wastewater funding “determines in many cases where development goes,” and committee members were told that funding decisions affect municipalities’ ability to support housing and new development. The department emphasized that federal mandates, including total maximum daily loads (TMDLs) under the Clean Water Act for Lake Champlain and Lake Memphremagog, drive much of the state’s clean-water spending.

Kammin described three broad categories of infrastructure the department funds: wastewater collection and treatment (including larger municipal plants and decentralized village‑scale systems), stormwater management to slow, sink and spread runoff, and drinking‑water systems. He said the Lake Champlain and Lake Memphremagog TMDLs are “the forcing driving factor” behind a large share of stormwater and wastewater work.

Officials outlined how the SRFs operate: federal formula grants require a state match (historically 20%), capitalized into loan funds that make low‑interest, subsidized loans to municipalities and eligible public water systems; repayments are recycled into new loans. IIJA supplemental funds have increased available subsidy, and the department said roughly half of certain IIJA allocations must be provided as additional subsidy or forgiveness rather than as conventional loans.

The committee received detail on the SRF prioritization process. Projects apply annually and are scored under separate priority systems for clean water and drinking water; points are assigned for eligibility and technical merits, affordability and other criteria. Kammin and Blatt said pollution‑control grants tied to the SRF operate on a sliding scale, with typical grant percentages running between 10% (floor) and up to 35% (ceiling) depending on priority points and eligibility. The department also funds planning and design work and provides subsidy for those planning dollars, which staff called important to help municipalities start projects with lower upfront risk.

Panelists described other funding partners: American Rescue Plan Act (ARPA) monies (the department said the Legislature authorized about $200 million in ARPA authority for water work), U.S. Department of Agriculture Rural Development, Lake Champlain Basin Program, Municipal Bond Bank, the Northern Border Regional Commission and HUD community development block grants. Kammin said ARPA funds have been used to support decentralized wastewater systems, combined‑sewer overflow fixes, and infrastructure for manufactured housing communities.

On housing, Kammin and Blatt said the department filed an Act 47 (2022) report on water and wastewater system capacity to support housing; they noted a governor’s budget request for a proposed $9.1 million standalone infrastructure fund intended to pay for waterline extensions and other work that the federal drinking‑water SRF cannot finance. Kammin said those state funds would “package together nicely” with SRF capital if appropriated.

Committee members asked about demand and cash flow. Blatt showed recent project examples — from a large treatment‑plant reconstruction to village system connections and a waterline project responding to PFAS contamination — and described a recent uptick in project tempo as additional federal dollars became available. Kammin said the department is tracking a temporary federal suspension of some IIJA draws and is “keeping tight track of that,” but added that the SRF cash‑flow (loan repayments and prior fund balances) allows the department to continue funding active projects for the time being. Kammin told the committee the department is “operating business as usual on this matter.”

There were no formal votes recorded during the briefing; presenters said they would return as the capital bill is considered and that some projects and lists are public in the SRF intended‑use plans. The department reiterated it can fund planning and design and will reserve funds for projects that demonstrate continued progress toward construction.

The committee hearing combined technical and financial detail with examples of ongoing work and emphasized the connection between water infrastructure funding, regulatory requirements and local development capacity. Kammin and Blatt offered to provide staff links and the intended‑use plan documents to senators and local officials for further review, and the department said it will be back to discuss specific capital bill line items later in the session.