Vermont Legislature SmartTranscripts:

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Good

[Robin Scheu (Chair, House Appropriations Committee)]: afternoon. This is the House Appropriations Committee. It's Wednesday, 04/15/2026, at 02:15 in the afternoon. We've just gotten off the floor, and we are going to have one of our learning sessions about clean water this afternoon. We're all set. Yes, we have a nice evening. So we're going to talk about the Clean Water Fund. We have Ted from Joint Fiscal Office and then folks from DEC, Deanna Petito, and Claire Madden. So welcome to both of you. And you have not been in here before, so we will introduce ourselves so you can know who we are. Then

[Wayne Laroche (Member, House Appropriations Committee)]: Pleased to meet you. I'm David Yacovone. I represent the Lamoille Washington District. Thank you. You.

[John Kascenska (Member, House Appropriations Committee)]: You're welcome. John Kascenska from Burke, a representative of the Essex Caledonia District. Same to you. Ten minutes. Okay.

[Thomas Stevens (Member, House Appropriations Committee)]: Tom Stevens from Waterbury, representing the Washington Chittenden District.

[Robin Scheu (Chair, House Appropriations Committee)]: Thank you. I'm Margaret Melton from Caledonia, New I'm Robin Scheu from Middlebury. Tiff Lilly from Burlington.

[Trevor Squirrell (Clerk, House Appropriations Committee)]: Trevor Squirrell under Helen Jericho. Wayne Laroche, Franklin, Richford, and Berkshire. I have Mike Mrowicki, Windham Ford District, Southeastern.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: And I represent two thirds of St. Alden's town. Wonderful. Nice to meet you all. For the record, my name is Gianna Pettito.

[Eileen Dickinson (Member, House Appropriations Committee)]: My pronouns are sheher, and I am the new deputy director of the Water Investment Division in the Department of Environmental Conservation. I'm joined today by my colleague online, Madden. I'll have her introduce herself.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: Good afternoon, committee. For the record, my name is Claire Madden. I use sheher pronouns, and my I work in the Clean Water Initiative Program in the Department of Environmental Conservation as the tracking and accounting supervisor.

[Robin Scheu (Chair, House Appropriations Committee)]: Great. Thank you. Welcome to both of you. Thank you. So happy help you today.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Thank you. And I also have my colleague, Maddie Potter. She's here to support some note taking and she's new to the position, but would be great to introduce yourself. Well, welcome. Thank you. Yeah, Maddie Potter, the Water Funding Supervisor with the Otter Institute program. Thanks for having me. Thanks. Yeah. Great. So take it away. Okay, great. Well, thanks so much for having us in here today to talk about the Clean Water Fund and Board. I'm going to cover the board and budget and some programs, and then I'll pass it over to my colleague, Claire, to talk about progress tracking and reporting on the Lake Champlain TMDL. Before talking about the Cool Water Budget, I thought it might be helpful to ground it in the work of the Board and the Fund in the full Clean Water Initiative. This is an interagency initiative. It's founded in state statute with the purpose articulated on this slide to provide the mechanisms, staffing and financing so that we can achieve and maintain compliance with Vermont's water quality standards. So it's interagency, and all of these agencies listed on this slide really support the Clean Water Budget build effort. Most of them receive and administer some of the funds from the budget process, and then they report outputs and progress on the Clean Water Goals. The role of Water Investment Division staff is the staffing support to the budgeting process, providing staffing support to the reporting process. And then some of our programs receive some of the funds from the budget as well. So we are also designing funding programs and delivering and reporting on those funds. How do we land with this initiative? The monkeys care about and benefit from clean water, but our water quality varies across the state. Some do suffer from excess pollution, including nutrients like phosphorus and nitrogen, and that can lead to some water quality impacts like cyanobacteria blooms. We develop what's called clean water restoration plans, or total maximum daily loads, for those waters that are impaired. That's coming out of the federal Clean Water Act. It's a nationally applied framework to set what we call a pollutant load. How much of a certain pollutant can go into a certain water body before that water body can no longer meet our water quality standards? So we have on the slide for you in green, dark green and light green is the Lake Champlain and Lake Memphrem Nagog TMDLs for phosphorus. Those are areas that are impaired for too much phosphorus going into those lakes. And then in the blue is the Connecticut River Drainage basin. That's part of a five state TMDL for nitrogen. TMDLs can be of many scales. So I think Vermont might have about 29 TMDLs total, some of them quite small for a brook. Say that's impaired with too much stormwater flow or for E. Coli. But these large scale nutrient TMDLs really drive our policy and our funding because of the scale of the problem and the scales of the solutions needed. Vermont has two foundational pieces of statute that really show our support and commitment to clean water. So for the Lake Champlain team DL in particular, we are relying on achieving a lot of our reduction across the landscape, or what we call non point source pollution reduction, as opposed to treating just what's coming out of a pipe or a point source. That's harder. There's not just one pipe that we can close off and say we're good. That's thousands of landowners, thousands of acres of land. And for the EPA to sort of approve that TMDL, we need to provide some reasonable assurances we'll actually be successful there. So these two pieces of statute in tandem really serve as that reasonable assurance to the EPA. So back in 2015, Vermont passed Vermont's Clean Water Act or Act 64, and it had a slew of water quality regulations many of you may be familiar with at this point. It enhanced our required ag practices, our acceptable management practices for logging roads, launched the three acre requirements for stormwater management on developed lands, etcetera. It also formed the Clean Water Board and Fund to say, Look, we have a mechanism to prioritize our funding and move funding for this effort. And it launched some tracking and counting and reporting requirements that Claire Madden will talk about. And then Act 76 of 2019 really clarified the purpose of this interagency initiative, the purpose I shared on that first slide, and set a floor state commitment of funding this initiative in 50,000,000 to $60,000,000 a year adjusted for inflation. That dollar amount was informed by an interim treasurer's report. So after Act sixty four of twenty fifteen, the treasurer did a massive stakeholder process and tried to assess what it might cost us to meet our clean water goals over the next twenty years and what should be the state's share of that cost. That got us to about 50,000,000 to $60,000,000 a year, and then that got enshrined in statute here of the state's commitment to investing in this work. The act also added a new revenue source for the Clean Water Fund, and I know Ted will talk through all the revenue sources and give you a good sense of the volume there. It updated to clean water budget priorities, which I'll talk a little bit about, And it launched four new grant programs that are listed here that get funded out of the budget. So how do the pieces fit together? Hopefully, is a helpful diagram, but the clean water Board and Budget are sort of these little circles over here on the right. And they are a big part of us meeting our full Clean Water Initiative goals and counting towards that $50 to $60,000,000 commitment, but they're not the only part. They really support the reasonable assurances to EPA that we have a structure in place to prioritize and move money. But we also look at other funding that's moved and administered by state agencies that leads to clean water outputs on the ground. And we sort of count that in the state share of commitments. For example, if the appropriations bill is looking at federal grants that are getting passed through the state for perhaps the state revolving loan fund, the EPA Clean Water Capitalization Award, That's something that we might count towards our big effort of money that we're moving.

[Robin Scheu (Chair, House Appropriations Committee)]: So the table on the

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: left of this slide sort of gives you, it's very small, you don't need to read it all, but gives you a sense that there's lots of agencies and lots of different funding programs in those agencies that's counting towards this initiative and counting towards our progress. And then the last thing to point on this is this pink circle called federally managed funds. There are federal entities working in the state and doing projects that have a clean water benefit where the money doesn't pass through the state at all, but they are what we call reporting partners. So they do help us track what they're investing in and how that might help us make progress on our T and DLs. So the USDA Natural Resource Conservation Service is one example of that, as well as the Lake Champlain Basin program. They report over to Claire Madden, and that's captured in our annual report to you all as well. So I'm

[Robin Scheu (Chair, House Appropriations Committee)]: just thinking back to when you talked about the 6% of meals and rooms. I was actually on house ways and means when we did that, trying to find a clean water source, and that the state had to commit a certain amount of money a year. And I remember Secretary Moore coming in to it might have actually been when I was in corrections clean water and drinking water projects. And if we didn't do it, the EPA would be doing it. And according to Secretary Moore, we didn't want the EPA to do it because we felt we could do a better job that was more tailored to Vermont and the way Vermont does things. And the EPA would just sort of do this blanket, whatever they do, one size fits all thing that wouldn't necessarily solve the problem. Am I sort of remembering that generally correctly? I know

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: you were here. I think you're not necessarily specific to the meals and rooms tax, but our progress on the TNDL, absolutely. They're sort of giving us the authority to choose how we're going to make these reductions. And we are leaning heavily on more cost effective solutions in the ag sector or in the forest sector and streams. If the EPA sort of takes back that authority, a lot of their tool is a National Pollution Discharge Elimination System or NEPTIES permit. And that's most often on point source stuff, which probably will fall to our wastewater treatment facilities or things like that. So it tends to be just a more costly solution. So we are trying as much as we can to show those reasonable assurances, like we're making good progress so that we can maintain ownership of how we do that, and that we can focus on those more cost effective solutions.

[Robin Scheu (Chair, House Appropriations Committee)]: Right. So cost effective and effective.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: And effective, yes, absolutely. That's it, yes. Online, so we

[Robin Scheu (Chair, House Appropriations Committee)]: want to do that. Now let's cut back

[Wayne Laroche (Member, House Appropriations Committee)]: to the effective part, because these are all paper requirements that you're sending in that satisfy a bureaucracy at EPA. And I haven't seen that a lot about it where the algorithms have decreased because of the actions we've taken, unless you have some spots that I've missed to look at. So my concern has been on a long list. I know there's modeling going on that's and using the input data, which modeling is not. And if you put the data in, you're gonna get good results. If not, you're not. So the bottom line will be, it is, will be whether or not we clean up our waterways. And so are we sticking to the modeling or are we actually gonna try to do sampling in the field to document changes as they move forward so we can actually have a field based, measurement based trend line of how our money is getting results or not.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: I think it's a good question, and I will try to start answering it, and then I may ask my colleague Claire to speak to pieces that I might have missed. Collecting water quality data in the field is expensive. A lot of our research is based on water quality data in the field informing how certain practices can reduce phosphorus. That data then creates the model, And we use those models to say, Okay, on average, this kind of practice might reduce this much phosphorus. We don't broad scale monitor all water all the time to measure that because of the cost burden associated with it. But we do use water quality sampling to inform the models and then use the models to track the progress.

[Wayne Laroche (Member, House Appropriations Committee)]: I know there's been some real time modeling or real time sampling in the past possibly say on the San Francisco River or some different places, right?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Yeah, exactly. We have the Laroche partnership program. So we do, and we invest in sort of water quality sampling in select areas for long term monitoring benefits. It's not I would not say it's like whole scale across the state in a way to track TMDL.

[Wayne Laroche (Member, House Appropriations Committee)]: Are there at least some Say, Missisquoi Bay, for example. Pick any one of the bays that have major algal blooms. Mhmm. Are there any that are long term that are taking samples of appropriate, you know, distances apart Mhmm. So that we actually could track.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Yeah, I can follow-up with that question for you. I know that the Lake Champlain Business Program is funding long term monitoring in certain locations. I'm not entirely attuned to how they're tracking it, but I know a lot of our partners are doing some of that research as well. And also acknowledging that there's a lot of challenges ahead and we may not immediately see algal bloom reduction, particularly many of us have

[Robin Scheu (Chair, House Appropriations Committee)]: seen the effects of climate change and when huge floods sort of. Climate change doesn't resonate with me very well. Now if

[Wayne Laroche (Member, House Appropriations Committee)]: you want to talk with storage sediments in the water bodies and having it be reintroduced into the water, that resonates with me. Oh, sure. Is a problem.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Like, see phosphorus is a challenge and as is when there are heavy storms, putting a lot more sediment and nutrients into our waterways than larger than our margin of safety might have accounted for. So it's a big challenge ahead for us. Absolutely. Any other questions before

[Robin Scheu (Chair, House Appropriations Committee)]: Did you have some time?

[Thomas Stevens (Member, House Appropriations Committee)]: Yeah, I hope this is a short answer for you. But what you just said about the water, about the storms. So our town had issues with our wastewater treatment plant. There was a whole issue with the state having to pay for it. It took us years to rectify that in order to reduce the TMDL to a state or not even a state but a federally promoted number. And then but for the lake itself and at that time we were a small percentage of what was going into Lake Champlain. Traveler Storm Irene that much phosphorus or that much waste in one day went into Lake Champlain. How does the state react to that when it's in relationship with what the ongoing numbers are? Are there times where you just have to say, oops, sorry, had a flood, we can't hit those numbers this year? How did that work? Because we spent so much time focusing on reducing so that we were contributing to the lowering of the TMDL and then through a circumstance out of our control, it totally blew the state numbers out.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Yeah, it's a fantastic question. There was actually a really great presentation by someone at the Leshan Play Basin Program. I have to double check and happy to share it afterwards because it presented right after the twenty twenty three floods where people were asking the same questions about like what is the impact and how does that sort of set us back in terms of the TMDL. Our reporting to the EPA is a great partnership, I would say. We report every year. We share this report that Claire is going to talk about. And we express the challenges and there's some reasonable negotiation about why there might be some setbacks or challenges there. Claire, is there more that you'd want to add to that piece? Invite me to speak.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: Thanks, Yana. I would just add that some inter annual variability in actual loading to the lake is to be expected and the TMDL really sets up a framework for a long term system for you know, reducing average loading over a long time period. While the individual years might represent some fluctuations in actual loading received by the lake the sort of planning framework represented by the TMDL is focused on reducing the average loading across a longer timeframe.

[Thomas Stevens (Member, House Appropriations Committee)]: But it sets you back. I mean, we're funding the fund, we're cleaning in partnership with the federal government. But is it fair to say that it sets us back every time that there's that much load being put into the lake in one time? Or are you trained to just look at it over a five or ten year period and not you trained to work with the federal regulations over a five or ten year period?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Looking at Claire. Thanks.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: It's a little hard to see everybody in the room. So I would say in terms of short term water quality impacts, certainly larger, you know, pulses of nutrient loading affect short term water quality, for example, in Lake Champlain. And at the same time, the investments that we're making are, know, providing a longer term structure for reducing that loading year over year. And so I I think it's some of both. I, you know, we we recognize some short term, variability and impacts related to, you know, weather systems and that type of variability, and also that these investments are really setting in place the mechanisms to reduce overall reductions over time year after year. I hope that addresses it.

[Robin Scheu (Chair, House Appropriations Committee)]: Cleanup isn't linear. The progress is not linear in this.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Right, and these projects, many of them last, like Claire is saying, ten, twenty, fifty years or longer. So there might be a pulse of sediment going down into the waterway, but the floodplain is still there or the stormwater practice is still there. And we'll, after that storm continue to be treating the flow in water. So I think that's part of what Claire is saying too, is that there are some flashiness of the loading into the lake, but there's still the investments in what we're doing is restructuring the landscape in some ways to capture and slow the flow into a longer time.

[Wayne Laroche (Member, House Appropriations Committee)]: But you're more of the funding people. We're kind of picking on you on some of these questions, think. Just looking at the funding, for example, we had a spiral bill come through here, Trevor, and it's taken $2,500,000 out of the clean water fund. My understanding is we have 14 water treatment plants in state that don't have their storm water separated from the rest of it. When we get a storm, they overflow and go into Lake Champlain. So the question then, the question is, do we have enough money and what's the holdup in getting those separations done so that we stop the overflows when we have storms? Do we have enough money? Are there impediments that we're not aware of? There permitting impediments? Are there contracting impediments? Maybe to ask about whether the town wants to

[Robin Scheu (Chair, House Appropriations Committee)]: do it and pay the money.

[Wayne Laroche (Member, House Appropriations Committee)]: Right, are there money impediments? Just on the money thing, are you not getting matches, grants to make it go forward from the towns or the cities? What's the playing field in terms of holdup in terms of getting this done?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: The big question, and I do think the answer depends on every project and depends on each program and funding source. A lot of the CSO work is going through the revolving loan fund, And so that is reliant on bond votes and municipal willingness and the ability to find ways to repay whatever is not forgiven. There is a large amount of need that is showing up on our annual priority lists for clean water work, for wastewater work, for CSO work. I think it means in the order 50,000,000 to $60,000,000 in projected need there. This budget is not covering the SRF. It does cover sort of our match there. In terms of approaching just the CSO program, there's not just one initiative that funds that and to say whether that's sufficiently funded or not. I mean, we do have very large scale clean water goals, and we probably don't have enough funding to reach all of those goals together.

[Wayne Laroche (Member, House Appropriations Committee)]: So how does the money coming out for the borrow bill play into this? Is that a money lost forever that could go to this? Or is it simply taking something out of the stream of money flow? Is it a significant size to make a difference in terms of the goals of what we're trying to achieve?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: My understanding is that it's a short term diversion of the funds. I haven't been following how it's evolved, but I do believe it's short term. The board has been advised of the bottle bill and expressed support for the needs. It really is more closely tied. The nexus might be pretty close there and appropriate for the uses in the short term. And the board has expressed support in February for this being an eligible use for an appropriate use. And there are mechanisms in place on the budget. If there is a revenue downturn, there's a contingency reserve or a risk reserve. There was not an expression of concern from the board in the short term to support this alternative need. So we talk about how the board and budget kind of play into the Big Clean Water Initiative. And so just zooming in on the board process for you all, they oversee this budgeting process and make a recommendation to the administration. They recommend the full Clean Water Fund as well as the Clean Water section of the capital bill. The work that they fund could be regulatory work, self driven by regulation or voluntary Clean Water work. There are five state agency secretaries and four members of the public that sit on the board. So it's a board of nine. And their their budgeting process is really kicked off in the fall when the emergency board provides an updated revenue forecast for the Clean Water Fund that really informs sort of what the budget targets are for the Board. And then the Board holds a public comment period to get input on the draft budget. Then they make a recommendation to the Governor. The Governor might make tweaks, might fully integrate it into the Governor recommend. And then it comes to you all in the form of the capital bill or the governor recommendation. And then it lands in the capital bill and corporations bill, depending on whether it's the Clean Water Fund or the Clean Water section of the capital bill. Once approved, if and when approved at the end of the legislative session, then each of these agencies get their own respective spending authority for their programs. They independently manage their funding and spending. And then we regroup the interagency work group sort of at the beginning of the next budgeting process, just to check-in on program and spending needs to inform the next draft budget.

[Robin Scheu (Chair, House Appropriations Committee)]: I'm just looking at the members of the Clean Water Board. Was

[Wayne Laroche (Member, House Appropriations Committee)]: looking

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Oh,

[Wayne Laroche (Member, House Appropriations Committee)]: sure. At

[Robin Scheu (Chair, House Appropriations Committee)]: So there's nine of them?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: There's nine, yeah. And the agencies that are represented are transportation, administration, commerce and community development, natural resources, and agriculture.

[Robin Scheu (Chair, House Appropriations Committee)]: Right. So Doug Farnham is on there. He's the chair. And then Anson Tebbetts, or designee, Julie Moore, Tate Brooks from ACCD, Joe Flynn, the head of one of the regional development corporations is on there.

[Wayne Laroche (Member, House Appropriations Committee)]: Then I don't know what the other ones are.

[Robin Scheu (Chair, House Appropriations Committee)]: So it is a mix. Okay, thank you.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: I mentioned that Act 76 reframed what the budget priorities should be. Oh, I got rid of this recording, but I'm sorry for the red dot that's moving around for some reason. Recorded this, and I can't get rid of it. All right. The phantom professor behind me here. So if put into 1389E, you'll see sort of

[Robin Scheu (Chair, House Appropriations Committee)]: just the beginning of the language.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: The board shall prioritize as follows. And then statutes sort of listed out for the board for first priority, second priority, third priority. And so the board sort of reframed tier one is the highest priority stuff, tier two, tier three, and other are the lowest priority stuff. And then what's listed under each of these little sections is what's in statute of what they should consider. Some of these things are actual other grant programs and statutes. So if you see links or lines in here, for example, the water quality enhancement grants are a statutory grant program, they must be considered as first priority. So that's what those links represent. Our general understanding of the intent from the legislature when this prioritization went in place was to prioritize first the programs that are voluntarily driven, recognizing that they need additional incentive and cost coverage to get done. And this is our leverage of showing reasonable assurances to EPA that we're putting money on these voluntary non point source landscape projects. As a second priority, the second tier tends to be regulatory projects, but for municipal owned infrastructure. So recognizing that the regulations will drive the projects, but also trying to offset some public costs. And then tier three is regulatory compliance, but for private sites. That's not a hard and fast rule for all the initiatives that fall in each of these tiers, but it gives you a sense of the general flavor of the tiering or intent. When Act 76 passed, the board reshuffled their budget sheet to match this priority. And then there were some things that kind of fell into another priority because they remained priorities for the board and for clean water. For example, we do need to have a 20% match or cost share to our EPA capitalization grant for our Clean Water Revolving Loan Fund. And so that remains a priority for us to have clean water capital dollars to do that. So that remains in sort of the other priorities tier. As well as the leaking crisis has another section of statute where that can tap into clean water funds. It wasn't mentioned in 1389E. So it all gets clustered under sort of other priorities for the board's perspective. At the bottom right of this slide and also in the sort of the PDF that I shared with you all at the very back is something called plain language budget table. It's the full clean water budget table with hopefully more public friendly language explaining what each of the lines are trying to fund, who receives them, the intent of the funding, the sectors it supports. So it might be a useful resource if you're interested in learning about each individual line a bit more.

[Robin Scheu (Chair, House Appropriations Committee)]: I have a question. Trying to read my notes from a meeting I was at where this stuff is brought up. And I don't know if it happens here or somewhere else, but I'm reading something about clean water service providers and what's going on with them, how it works, are there projects getting done under those? Because there was something else that was in place before that that seemed to be working. And I think there was a question as to whether this new thing is working as well and whether projects are actually getting done. Sure, yeah. That's everything.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: So Yeah, can talk about that. I'm happy to in a little bit. That's the water quality restoration formula grants.

[Robin Scheu (Chair, House Appropriations Committee)]: Okay, so let

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: me get one. Yeah. Thanks. Please remind me if I don't answer your So question when we get to this is just a snapshot of the types of projects. When we talk about clean water projects, if that doesn't create a visual for you, this is hopefully creating a visual where all of these line items in the budget might fund across what we call land use sectors. Some of it's just funding stuff on agricultural land or an urban spaces, storm water or natural resources would be like forestry projects or a floodplain restoration project. We do a lot of road improvements to make them more resilient to heavy floods and rains and wastewater infrastructure improvements as well. So this table hopefully gives you a sense of the intent of these types of investments in these sectors, but also highlights some co benefits too. A lot of these projects might help also support things like improved public safety if our roads aren't getting washed away in the next storm or some healthy soil carbon sequestration when we have healthier ag soils and components like that. So this gives you a sense of some of the co benefits that come along with the clean water work. This is just a visual to show how the tiering shows up in the Clean Water Board's budget sheet. This is not necessarily the budget sheet you see, but the Board has the capital dollars and the Clean Water Fund kind of pulled together. So you'll see that they kind of cluster Tier one, Tier two, Tier three and other. And the board has interpreted priority to be volume of funding. So they've aimed generally to say, at a minimum, they're going to get 60% of the budget into Tier 30% into Tier two, and then 10% into tier three and other. And so we create these pie charts to help them see where their budget is landing and for them to make tweaks if it would be. It's not a hard and fast rule, but the board tries to use that as a guardrail. And there are years when it diverges from that because there's other funding in the Clean Water Initiative system that might be supporting an initiative. And so this is maybe hopefully get to your question. So we spoke about the Water Investment Division providing staff support to the budgeting and staff support to the reporting. And then our program also does receive some of these funds and design and manage funding programs as well and quite a large share of the budget. At the state fiscal year twenty seven-one, if you include both the capital and clean water fund dollars, WID staff are going to be administering about half of the budget in our division. So these are the lines that we help administer. And the first is the Water Quality Restoration Formula Grants, Madam Chair, with the Clean Water Service Provider, affectionately called QISPS, and their advisory councils, the Basin Water Quality Councils, called BLICS. And the way that this works, this one of the four new grants that came out of back 'seventy six and was really a foundational structural change to how we were going to move money onto the landscape with a very targeted approach towards phosphorus production. So the way that these work is that each tactical basin watershed within Lake Champlain and Lake Memphremagog, so there's seven of them total, has an assigned QISP. And this entity receives from the state a formula grant. And the entity and their advisory council, the QISP and the WISP, are charged with finding projects across their landscape that are voluntary projects that will have the best bang for the buck in terms of costs related to phosphorus reduction. So it was like a new unique way to say, Listen, Chris, you have this. We're giving you this formula. This is how much phosphorus you're going to try and reduce with this amount of money. Go find those projects. And so they had to sort of There was a lot of learning over the last few years since it was created because we had to do a lot of rulemaking, guidance development, standing up these entities, new relationships being built across the advisory councils and the entities. They're certainly doing projects and making progress and impressively cost effective projects. I think this priority is I think they're averaging about $8,000 per kilogram, which is I should know what the average is to give you that sense of it. But it's supposed to be very cost effective for that. But it's an enriching program. And there's going to be growing pains in that. But they're certainly showing some good progress in their investments. Okay. So projects are happening and money's Yeah. Getting off the There's definitely projects happening. We'll talk about the challenges. For all of this, we've had to invest quite heavily in partner capacity because there's been quite a ramping up of the fund over time. Some really surprising pandemic era impacts on revenue that we weren't quite ready for. And we really wanted to ramp up the capacity of our partners to do more projects and more complex projects. And so for this funding program, for other funding programs, you've really had to invest in that capacity first and foremost. That takes time to realize. So that's the quests and wits. And the next picture is the tactical basin planning line. And so also in stat ute, have our watershed planning program is required to create what's called tactical basin plans. They are our sort of implementation plan. They say how we're going to achieve the TMDL at a smaller watershed scale in five year increments. They really help us prioritize the projects. And they're a big stakeholder process that our planners manage. We're required in STAT Cube to provide financial support to certain entities to engage with us in that. And so we provide funding to watershed groups, regional planning commissions, and natural resource conservation districts through the Clean Water Board to say, please help us review our plans, provide input, help us with the public meetings, tell us what the priorities are for the watersheds that you know best. The third picture in represents our water quality enhancement grants programs. Another statutory program has five statutory goals: restoring, protecting, enhancing our water quality, enhancing community resilience and the use and enjoyment of the waters. So this one, we have a lot of sub initiatives to support and advance those goals. So we do river corridor easement work where we purchase easements that allow the river corridor to meander, restore it to equilibrium. We fund tree plantings along streams. We fund floodplain restorations and dam removals statewide with that grant. The next one to the right is our program and partner support line item. This is a smattering of investments to advance our tracking and accounting to advance our We do some water quality testing and assessment with this money. And we have a block grant to invest in capacity for our partners so they can learn more about the best practices in clean water. This represents our the bottom left picture represents our regulatory stormwater investments. Support we provide grants to municipal separate storm sewer or MS4 communities to comply with that permit and do stormwater projects to meet their phosphorus control plans. And three acre projects owned by municipalities and also private sites. And then again, we manage the Clean Water State Revolving Loan Fund and the Municipal Pollution Control Grants, which are slow interest loans for clean water projects like wastewater facilities, stormwater, and some natural resource work here as well. That's a lot on one side, so I'll pause before passing over to Claire to talk about progress if there's any more questions on programming and budgets.

[Wayne Laroche (Member, House Appropriations Committee)]: All

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: right, thank you Gianna for the program overviews. The state tracks accounts and reports on state investments in clean water and the outcomes and impacts of those investments. We published the Clean Water Initiative annual performance report to fulfill state statutory reporting requirements that Gianna mentioned came out of Act 64 and Act 76, as well as to fulfill reporting obligations to the Federal Environmental Protection Agency, EPA, on the state's large scale phosphorus TMDLs in Lake Champlain and Lake Memphremagog. Not only does the report provide transparency and accountability and state investments in water quality, but the data underlying the report also provides a key mechanism to assess our progress towards reaching the state's water quality goals and to support adaptive management of programs and funding initiatives. Next slide please. The Lake Champlain TMDL includes a negotiated accountability framework which provides additional assurances Gianna was mentioning earlier that the state will be able to meet the pollution reduction targets set by the TMDL within the twenty year implementation timeframe. An accountability framework is not a part of every TMDL, but it has been used as a strategy where a large portion of the target reductions in pollution are attributed to non point or diffuse sources of pollution rather than, end of pipe sources that are a little bit easier to track down and address. DMDLs with a large non point load reduction requirement are more difficult to achieve because the pollution source is not as easily identified, has many more contributors, and requires a wider range actions. So that requires more oversight to ensure our targets are being met compared to the TMDL. In Vermont, this approach is unique to our Lake Champlain TMDL, but it has been used in other areas across the country, such as the Chesapeake Bay. So tactical basin plans, Gianna just mentioned, written by DEC's watershed planning program with substantial local stakeholder engagement, serve as the implementation plans for each watershed within the larger Lake Champlain Basin. They identify regionally specific actions and priorities and set interim targets tied to five year planning cycles. Each year with the Clean Water Initiative annual performance report, the state prepares basin level interim and final progress reports to report to EPA on our progress implementing the strategies that have been identified in the tactical basin plans. EPA uses all of this reporting to issue us report cards each year assessing our progress in demonstrating achievements towards reaching the TMDL reduction target. Next slide, please. This set of visuals is hopefully helpful in explaining the TMDL. A TMDL is a modeling exercise, but as Gianna mentioned earlier, the TMDL model is informed by and calibrated with water quality monitoring data of measured water quality parameters. So the TMDL sets a baseline that's represented in the figure on the left side of the screen. That's essentially our starting point or the estimated annual average loading during the baseline period. And the TMDL also sets an allocation, which is represented by the middle figure. This represents the estimated annual loading that the system, in this case Lake Champlain, can receive while remaining within the state's water quality standards. The allocation minus the baseline is essentially the reductions that we're aiming to achieve. In Lake Champlain Basin, we have a net reduction target of 212.4 metric tons per year of phosphorus reductions by the end of the twenty year TMDL implementation timeframe. The TMDL modeling also adds a margin of safety that's represented by the purple piece of the pie. This is a buffer. It's added as part of the overall allocation to account for uncertainty in the modeling itself, as well as uncertainty caused by the uncertainty of future loading that may be caused by some of that interannual variability in loading any given year that we were talking about earlier. These figures are colored by the general land use sector. And while the TMDL doesn't require that we reach reductions by sector, this helps us to lay out a pathway for the scale of implementation that will be required in each sector in order to achieve our overall reduction goal. It also shows that reductions not achieved in one sector will need to be met through actions addressing pollution from another sector in order to reach that overall net reduction target. Next slide, Jana. Thanks. So now on to some of the results for the TMDL progress in the Lake Champlain Basin. The phosphorus reduction data that we track and report does represent modeled estimates. There are thousands of individual practices at work in any given year, contributing phosphorus reductions to Lake Champlain. So that scale doesn't allow for site specific monitoring of the every practice that's been implemented, but we do use strategically collected monitoring data and field based measurements of practice effectiveness to inform the development of the accounting methods that we use to generate these modeled estimates.

[Robin Scheu (Chair, House Appropriations Committee)]: The methods I'm not really sure how to read these two things because they kind of look the same except one's purple. So help us understand how to understand this, please.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: Absolutely. The figure on the left shows our estimated phosphorus reductions by sector, by land use sector, and state fiscal year for the reporting period.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Okay. So you

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: can see there agriculture represented in yellow, represents the, you know, leads our progress in terms of TMDL phosphorus reductions. The sector that also has the largest amount of phosphorus loading to address from the figure on the previous slide.

[Robin Scheu (Chair, House Appropriations Committee)]: Okay.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: You may notice that fiscal year twenty twenty five bar in the left hand chart is faded out. That is to indicate that results are preliminary based on the data that we had available at the time of report compilation. In recent years, we've gained a better appreciation for how data availability influences the progress that we're able to quantify and report. We collect data for this reporting exercise once a year, and many programs that contribute data to our reporting operate on funding and reporting cycles that don't align perfectly with our data collection timeframe. So we see this sort of data lag showing up in our results in recent years based on that disconnect between different time frames for capturing results and reporting them to our reporting systems. That is demonstration Yes, go ahead.

[Robin Scheu (Chair, House Appropriations Committee)]: Go ahead, Wayne.

[Wayne Laroche (Member, House Appropriations Committee)]: So when I look at these graphs, I see one end of the normal distribution and the way that they increase like that and don't vary up and down from year to year, all this would make me wonder why.

[Robin Scheu (Chair, House Appropriations Committee)]: Not sure I understand what you're saying.

[Wayne Laroche (Member, House Appropriations Committee)]: Look at the if you just drew a line along the top of those it would be and if it continued down it was the other way around would be a croissant distribution. This is like half of the normal distribution. And the way it increases up in a nice smooth curve, if you drew a line through it, you wouldn't expect that from year to year that the phosphorus would be exactly the same. So you think there would be some jiggles in that.

[Robin Scheu (Chair, House Appropriations Committee)]: Yeah, phosphorus, they've been reducing phosphorus.

[Wayne Laroche (Member, House Appropriations Committee)]: Right, but it's

[Robin Scheu (Chair, House Appropriations Committee)]: And they've increased the reduction of phosphorus of fusion. Now this year it's going down.

[Wayne Laroche (Member, House Appropriations Committee)]: Well, I'm not looking at whether it's going up or down. I'm just looking at the shape of the curve. And I would not think that the shape of the curve would be nice and smooth like that. So I'm asking, you know, what do you have an explanation for that?

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: I can provide a little bit more context for what this data represents and hopefully that helps. So we capture results of a lot of different types of projects that are contributing a phosphorus reduction that is represented in this figure. And some of those are projects that we know function year over year. So for example, if we plant a riparian buffer, that's a tree planting along a stream, there's a pollution reduction benefit to that action that doesn't just happen in the year that the planting occurs, but actually contributes that benefit over many years into the future. So that might be part of the curve that you're seeing is sort of a cumulative growth in our overall progress in implementing practices to reduce pollution. And I think the other facet of this is that these are those modeled estimates. So while we've talked about the phosphorus loading in terms of measured concentrations of phosphorus load, perhaps showing a little bit more interannual variability, these estimates are representing the average load over a longer time span. And some of that interannual variability is not represented in this data, but is captured through DEC's watershed management divisions monitoring programs and the data sets that they collect and analyze.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Does that make sense in terms of like, because it's the model, like we're doing more projects, we're modeling what's the

[Wayne Laroche (Member, House Appropriations Committee)]: I mean, the data, guess the best question would be, is there some place where I could look and see the sampling methodology for collecting the phosphorus samples, the water samples, and how frequently, what kind of schedule those are taken on, the number of samples taken, whether they're taken on a rising hydrograph or whether they're just randomly taken or they're taken at, you know, are they specifically sequenced across the whole hydrograph as the stream comes up? Because usually what happens when you get a storm event, it washes off stuff from the soil and you get phosphorus coming in and you'll get that maximum amount during the rising hydrograph. Then as it falls back down, the proportion of phosphorus in the water decreases, right? Right. So it depends if you're sampling, if you don't have a proper sampling design, you might be, if you're only sampling after the storm's roof or whether you're going be lower than what you tell if it's on the other one. Is there some place where I can look and see the methodologies going into all this collected sample?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Yeah, I think we can work to follow-up with you on that. There's certainly different research projects that have their own methodologies that they've established, even within Laroche partnership program that we fund and support. Different entities are establishing different timeframes by which they're doing rad samples.

[Wayne Laroche (Member, House Appropriations Committee)]: One of the ones that is the benchmark that you're using for judging, what you're putting into your model, the model that you're going to be reporting on to EPA or whatever, not it's all of them. I mean, you must be taking one specific dataset to do that.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: The models that generate these phosphorus reduction estimates are not using water quality sampling data. They are the methodologies are informed by the results of monitoring data, but those are not directly connected.

[Wayne Laroche (Member, House Appropriations Committee)]: These are model outputs. These these are model outputs. Yeah. Okay. I think that answers my question.

[Robin Scheu (Chair, House Appropriations Committee)]: Okay. Let's continue. Let's thank you. Sure.

[Claire Madden (Tracking & Accounting Supervisor, Clean Water Initiative Program, VT DEC)]: Okay. So the last point on this slide is that essentially the figure on the right side of the screen, the purple bars, the lighter purple bars are showing the exact same data as are represented on the left figure. And the darker purple outlines show what we were able to quantify for phosphorus reductions in our previous year's report. So it just gives a visual to sort of the data lags and the backfilling that we're doing every year when we collect data. We have an opportunity to fill in gaps where we missed some data that wasn't available in the previous cycle and provide a more holistic representation of our progress to date. Next slide please, Gianna. So we can report on progress towards reaching our TMDL target that represents the types of practices and the programs where we have systems and methods in place to capture the data and quantify the results. And that data shows that we're about 35% of the way to reaching the Tianjin target in Lake Champlain. But there are a few types of gaps in our progress reporting that we're working to fill. One is the data lags that I just spoke about. Another type of gap is state supported implementation through both financial assistance and through regulations, for which we do not yet have systems to track the implementation and estimate the phosphorus reduction. In some cases, those gaps are due to ongoing research in order to inform the development of a methodology to estimate a phosphorus reduction and the effectiveness of a certain practice. In other cases, the work is to establish a framework system to collect, store and process the data in order to estimate the phosphorus reductions. Finally, we have some programs, especially in the regulatory space where the framework is set, but implementation is expected to continue over the next several years. So, have expected reductions that we have not yet realized, but the regulatory structure in place to ensure those things happen within the twenty year TMTL implementation timeframe. Next slide, please. So that was an overview of just a snippet of results that we've tracked to date in the Lake Champlain Basin, and it's really a small subset of all the data that we collect, prepare, and make publicly available as part of our annual reporting process. So I want to note that the work that's supported by the Clean Water Fund, the Clean Water Initiative, and all of our clean water reporting partners is happening statewide, And the Clean Water Interactive dashboard is a tool that's available to view all of the data that we've compiled for our annual reporting, including investments by sector, funding type, geographic region, quantitative project output measures, phosphorus reductions, and cost effectiveness. There will be a link to this resource at the end of our slides. Before wrapping up, I want to highlight the intersection between clean water and resilience in Vermont. The investments that we're making in water quality are providing valuable co benefits that Gianna spoke about earlier. So the results of some of our clean water project implementation are listed on the screen, and I'll just give a couple of examples of co benefits that go along with these project outputs. Restored floodplains improve a river's ability to access a floodplain area, which allows fast moving waters to spread out, slow down, and infiltrate into soils and reduces the erosive energy of large volumes of fast moving water. Riparian buffers plant trees along stream banks, which add shading and habitat structure to river corridors to help keep water temperatures cool and protect sensitive species while adding tree canopy which increases carbon sequestration. Road improvements increase public safety in extreme weather through better drainage and erosion control, and by ensuring that stream crossings are correctly sized. And adding stormwater treatment practices to our urbanized developed lands helps to direct stormwater runoff to appropriate treatment locations and reduces localized flooding during heavy rains. Next slide, please. So to wrap up, the state has made a long term commitment to support the clean water initiative at roughly 50 to $60,000,000 per year. We have non regulatory programs established to fund the identification, development, design, implementation, and maintenance of a wide range of water quality improvement practices that treat pollution across different land use sectors and provide those important co benefits. We have regulatory frameworks in place and implementation under those regulations is underway with more progress still to come as those programs work to reach permit standards within their designated timeframes. All of this work across non regulatory and regulatory programs is supported by a network of partners that are working on the ground to make up the clean water workforce. So we're also making intentional investments in capacity building to ensure we have a well trained and well resourced network of partners on the ground able to complete this work. And we're implementing an adaptive management approach. The long term water quality restoration goals in the state will take time to achieve, but through the tactical basin planning and annual reporting processes, we're systematically checking in on progress that we've made and adjusting strategies to fill gaps. At the same time, we're expanding our tracking and accounting systems to capture more results in order to provide a holistic assessment of what we've completed in relation to our water quality restoration targets. And importantly, we're starting to realize the benefit of continuity and sustained momentum in system. These programs take time to establish and stand up and build the collective capacity to implement. And it's important that we continue supporting this work through sustained and predictable levels of investment so that our partners are adequately resourced and equipped to do this work on the ground. So while there's still work to go, we do feel we're on a path to reach our long term water quality restoration goals. And this slide provides links to some more resources that we've mentioned throughout the presentation if you'd like to dive into more details.

[Robin Scheu (Chair, House Appropriations Committee)]: Thank you, and this is posted on our website, so we can click on the links there. Yeah, great.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Any other questions? Thank you so much for your time. Thank you.

[Wayne Laroche (Member, House Appropriations Committee)]: Thank you.

[Robin Scheu (Chair, House Appropriations Committee)]: Feel free to hang around because we might have questions if you want to, if you have time, and then we'll have Ted come up and talk to us about

[Wayne Laroche (Member, House Appropriations Committee)]: the fist novel for a few. For sure.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: And while we're transitioning, I do have a joke

[Wayne Laroche (Member, House Appropriations Committee)]: about adulting. What

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: kind of card is an egg drive?

[Robin Scheu (Chair, House Appropriations Committee)]: A

[Wayne Laroche (Member, House Appropriations Committee)]: what?

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: A Volkswagen.

[Wayne Laroche (Member, House Appropriations Committee)]: Yeah. You had to start off in the right direction. You were there. Right. All Well,

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: and then now we're going to talk about and I can wish you a happy tax day. So all sorts of things going on.

[Robin Scheu (Chair, House Appropriations Committee)]: I saw that one of our members' partners made cupcakes that spelled out Happy Tax Day. And the comment was, For those who celebrate. I

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: got to eat the memes part of ways and means of those cupcakes. So I'm going to talk through very high level, kind of gloss over some of the Clean Water Fund history because folks from DEC did a good job of giving that part of the presentation. I will talk about fund revenue sources as a member of the JFO revenue team, my favorite part. Unfortunately, have allegiances. And the fund appropriation process and uses. Very high level, Gianna did go over this part of 10 BSA thirteen eighty seven, which sets a goal of 50 to $60,000,000 as adjusted for inflation to allocate to the clean water initiative for all of the various clean water activities that happen within the state. I'm not going to talk about CNVLs. And yes, this is all sort of a review. I do want to highlight that to put emphasis on the fact that the clean water board the budget and the fund are just one part of the clean water initiative. So they have a I pulled this from a policy document. Of the overall in fiscal year 2025, there was $174,000,000 in overall state administered clean water funding that happened, and of that $174000000.14.7 was from the Clean Water Fund, another 9.4 from the capital bill. So we're just we are talking about a subset of this overall universe with a bunch of different actors and and who are who are operating here. So The three revenue sources for the fund, the first one is the clean water surcharge on the property transfer tax. It is currently 0.22%. Before act 181, it was 0.2% that change in one act one eighty one, they increased the threshold where the clean water surcharge would take effect for principal residence transactions. And in doing so, they increased the rate to make that change close to revenue neutral. That's the goal there. And so the clean water surcharge applies to the value that is above $200,000 on a real estate transaction for principal residences. And then it applies over $250,000 for principal residence transactions that are financed through something like the ESRD, Rural Development, or BHCB. Yeah, so kind of these financing programs and then other transactions, second homes, commercial properties, etcetera. The Clean Water surcharge applies to the full value of that transaction. So within the part that goes to the clean so that surcharge generated almost $10,000,000 in fiscal year twenty five. Of that, there is a statutorily required transfer of $1,000,000 to the Housing and Conservation Trust Fund. So the amount that went to the Clean Water Fund was just shy of $9,000,000 in fiscal year twenty five. And we'll talk about the trajectory of these funds and these revenue sources in later slides. The Clean Water Fund also has 6% of meals and rooms tax revenue, and so that is the largest revenue source for the Clean Water Fund of these three sources. It generated approximately $15,200,000 in revenue for the Clean Water Fund in fiscal year twenty five. Then finally, unclaimed bottle deposits, or Essex, generated $4,300,000 in clean waterfront revenue. That's the smallest of these three dedicated revenue sources. An unclaimed bottle deposit is when you buy or you purchase a bottle that is associated with a deposit and someone doesn't claim that bottle on behalf or you don't take it to a redemption center. The Clean Water Fund gets those unclaimed

[Wayne Laroche (Member, House Appropriations Committee)]: bottle.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: And so this is a longer term view of how those revenue sources, the amounts they've contributed to the Clean Water Fund. So this graph here, we'll note, does not include capital bill or ARPA funds, appropriated dollars or other sources. And for the first, from fiscal year sixteen to '19, the clean water surcharge was the first piece that was added to the clean water fund. And then in fiscal year twenty, that's the Escheats and Meals and Rooms tax 6% allocation was added. Unsurprisingly, FY twenty, afterwards, after the pandemic, there were quite a few trends that really contributed to strong revenue growth within the Clean Water Fund. So one piece is the Clean Water surcharge. We all know what happened to the real estate market post pandemic. It's quite strong, and so really benefited the Clean Water Fund. At the same time, the meals and rooms tax right after the pandemic took a real hit, but then recovered quite strongly as Vermont was folks when it started spending on meals. And Vermont early on after the pandemic was a popular domestic destination for folks to take vacation. Revenues between fiscal year twenty and 2022 increased pretty substantially. And then starting in fiscal year twenty three, the increase

[Thomas Stevens (Member, House Appropriations Committee)]: in

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: the state's cash balance through holdings of ARPA funds and pandemic related federal funds more broadly meant that the plain water fund started to see material amounts of interest income allocated to it. And so, this is shown in the green other revenues box. Overall, after the substantial increase, after the pandemic, revenues have been right around the $30,000,000 mark. And they are expected to be in that ballpark, both in fiscal year twenty six and '27, which are projected towards the end of this graph. Those are the dedicated revenue sources for the Clean Water Fund. I will also use the term base revenues in line with some of the documentation from the Clean Water Budget. In addition so that is representative of the Clean Water Fund. These other two pieces are a part of the Clean Water budget that is put together by the Clean Water Board. There is an annual target of ten to twelve million dollars through the capital bill every year, And reflective of that target, act 33 of 2025 appropriated $10,000,000 in fiscal year twenty six and twenty seven. And then the capital adjustment as path that house specified the actual spending in fiscal year twenty seven, but it is $10,000,000. And so I put the projects that are in the capital bill here. Yeah, so that is the piece of the Capitol bill that is a part of the Clean Water budget.

[Robin Scheu (Chair, House Appropriations Committee)]: Did you a question?

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: You account for things in

[Robin Scheu (Chair, House Appropriations Committee)]: the Capitol bill that are part of the additional capital bill, the wastewater, the matches for state money, the federal money that goes in when people are trying to upgrade,

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: This doesn't employ that, does it? These include the specific appropriations. I'm trying to think I'd have to go back and look at the bill to see if match was provided through the capital bill. But yes, matching funds can be a part for federal revolving loan fund pro programs are sometimes in capital numbers? Not in these $10,000,000 positions.

[Robin Scheu (Chair, House Appropriations Committee)]: Those are in the in addition, those things have been traditionally in the capital bill. Yes.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: Yes. And I would have to I'll I'll check at act 33 to see if there are specific amounts for matches and provide that information to you all.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: Can I release that?

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: Sure.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: There's actually two lines in the clean water budget, the municipal pollution control and the state match to the clean water SRF. For state fiscal year '26, I think we merged them to just 4,000,000 to go to either as needed. So the full 10,000,000 that goes through this budgeting process and recommendation is reflective and represents both the municipal pollution control grant that's sort of an add on to some of the NSF loans as well as our state match. But sometimes that state match obligation is a little unknowable in the budget. We don't yet know what's going to come from EPA. And so that one year, there was an idiosyncrasies in which it was all merged to one line, but this year in 2017, it's separated back out into two lines. So that's included in the ten year? It is included, yes. Okay.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: Great, that absolutely pays to have the experts in the room. And so another piece that has been a part of the clean water budget in more recent years is ARPA funding. In total from fiscal years '22 to '24, about $35,000,000 of ARPA funding went through the clean water budget. This is a relatively small piece of There are hundreds of millions of dollars allocated to clean water uses through ARPA funds. And so I provided the numbers that were in the clean water budget in those fiscal years. As you all are well aware, ARPA funding must be fully expended by the '26. I was Doug Farnam was in Senate Appropriations recently talking about the stat It was not his main goal, but he talked a bit about ARPA funding. And so there will be a quarterly update, I think, that will be ready in early May. And so there'll be a more recent update on the status of where our book funds are within this use. Yeah. Okay.

[Robin Scheu (Chair, House Appropriations Committee)]: So early May, you think? So I'm gonna point to Autumn and just say, let's get Doug in here when he's got we were we wanted to get him in when we had his quarterly stuff. It supposed to be due by the March

[Wayne Laroche (Member, House Appropriations Committee)]: or something, or maybe it was early in April. But soon.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: It is.

[Robin Scheu (Chair, House Appropriations Committee)]: Just want to get an update.

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: And so this slide puts the Clean Water Fund, the Capital Bill, ARPA funding, all together to show how those sources have changed over time. At the bottom, right, it really talks about three phases, which is the first one in the beginning. The capital bill provided quite a bit of funding. So looking at fiscal year twenty nineteen, Capital Gold represented almost all of clean water budget funding. And then 2020, reflecting the chart that showed the large increase in the Clean Water Fund's revenue sources, this allowed it to grow over time. Then starting in fiscal year twenty two, you can see the inclusion of ARPA funding to the overall total. And then more recently, the Clean Water Budget has incorporated unallocated unreserved funds from previous years to kind of manage the downturn. Right? I think as part of the budgeting process, folks there can correct me if I'm wrong, but the understanding right is that there was no expectation that ARPA funds would last forever. So, right, wanted to manage as those funds disappeared to kind of make sure that the landing was more soft. And so unreserved unallocated in many cases reflected cases where more funding became available when revenues outperformed projections. And, yeah, so that's the dash line here. Blue dashes here. I'm going to the next few slides are talking more about specific projects within different tiers, which I think you all got a great overview from DEC on. This is the part of the presentation if I were doing this by myself. But, yeah, it shows the funding allocations for different tier initiatives. And then some example projects by tiers. These are pulled from the FY twenty seven clean water budget. They're just some examples of things that happened in different tiers. And then finally, I'm gonna skip more ahead, just the show. I put this slide together to show the different agencies that are involved in the Clean Water Budget, how much they're receiving between Clean Water Fund, the basis kind of from

[Thomas Stevens (Member, House Appropriations Committee)]: the

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: core revenue sources, the dedicated revenue source of the Clean Water Fund, and then showing which pieces come from the capital bill, and then showing one time funds, are a mix of interest income and that unreserved unallocated I talked about earlier. Yeah, and then showing how your base revenues in addition to the capital bill, in addition to one time funds, get you to about $45,200,000 in a recommended amount for the clean water budget in FY '27. So very high level, from the beginning, talking about how the Clean Water Fund is in budget is just one part of the Clean Water Initiative. It's part of a complex network of funding sources and appropriations. They're dedicated revenue sources managing the capital bill. There are appropriations to a whole wide range of state agencies and thinking through priorities across different tiers. I will say more recently, this was I think there were a lot of questions right after the pandemic where revenue sources would end up, how the system what the system would feel like after ARPA funding came through. There is For example, one of the funds revenue sources is the meals and rooms tax. And we hear stories that one component of that is rooms. Right? And as Canadian tourists might not be coming to Vermont, if there is, for whatever reason, some sort of recession, right, like what thinking through long term, what is the the the outlook for the fund's revenue sources. But it's seeming as though after the pandemic, we're finding ourselves in a new normal in terms of what funding amounts might be to the clean water budget.

[Robin Scheu (Chair, House Appropriations Committee)]: We don't have to backfill or anything.

[David Yacovone (Member, House Appropriations Committee)]: Dave, go ahead. From what I can garner here, and I may have missed it, this doesn't seem to the sources of funding terribly susceptible to changes at the federal level, question mark. Would you agree or The revenue sources I mean, one piece of it is I don't know

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: if I'd describe it as a change. I believe our legislative economist called it an unforced error around action you know, the attitude towards Canada and how that impacted our tourism. So that's one potential source. A lot of them are going to be more you would describe them as procyclical as the economy does well. These revenue sources will continue to do well. The real estate market is highly dependent on federal what's happening independent, what's happening at the federal level through the independent federal reserve and how they're setting interest rates. And so there is more macro level impact to Vermont, but I would say it's more reflective of the economy as how those things are going.

[Wayne Laroche (Member, House Appropriations Committee)]: Not necessarily a change in mood in Washington?

[Ted (Joint Fiscal Office revenue analyst; last name not stated)]: Not necessarily. I would defer to our experts at DEC if there because there are quite a few federal sources that are a part of the broader clean water initiative. If there have been any, they would more closely track whether those those sources k. That they monitor, whether there's any change or policy conversations in Washington around those funds.

[Robin Scheu (Chair, House Appropriations Committee)]: Question. Okay. I'm not seeing any more questions. Thank you guys for coming in. I really appreciate putting this together and helping us get a better understanding of what's going on. I know it's a lot of work, came into the legislature in 2017 and things were just starting to get going and I was on corrections institutions so they kept the clean water and what was happening there and just having to stand this whole thing up right from nothing to where you are being that building capacity becomes so important because this is

[Wayne Laroche (Member, House Appropriations Committee)]: a really long term project so So I'm glad we're sticking with it.

[Gianna Pettito (Deputy Director, Water Investment Division, VT DEC)]: I do appreciate the opportunity to speak with you all about the progress that it's advancing and your interest and attention to it too. It's really valuable to us. Thank you. Great. Great thanks so much yeah

[Robin Scheu (Chair, House Appropriations Committee)]: you so committee this is all we have for today and tomorrow morning we have a bill as AB9 have The 10. Okay. I was looking on the calendar, I think I saw it, and we can pick that up. So I think we're not in here just now. We have one bill. We will have other bills coming to us. The bill that just got referred to tickets and needs today will come to us after it's there. Think it's going to come to us because there's proteums in it. So we're getting those kinds of bills at this point. Actually, let me tell you what else I know of for bills that we might be getting.

[Wayne Laroche (Member, House Appropriations Committee)]: What's Bill's 89? Expanding a survivor benefits. Survivor benefits. We're going

[Robin Scheu (Chair, House Appropriations Committee)]: to get some we're going get CTE at some point, that's in house commerce. There's an economic development bill that may come in to us. There's another omnibus housing bill maybe, S-three 28, I don't know what that is, there's a miscellaneous ag bill but I'm not sure whether that's coming to us or not, Let's see.

[Wayne Laroche (Member, House Appropriations Committee)]: No, that's the Ed bill.

[Robin Scheu (Chair, House Appropriations Committee)]: We already did the Ed bill. I think after the Ed bill, everything else is going to seem like a shame. So that's what we've got. So we're tomorrow at ten. We'll text you if it's anything diff