INTRODUCTION

Context For The Governor's Blue Ribbon Panel

We begin with the knowledge that the citizens of Maryland care about the Chesapeake Bay and the rivers that feed it. Surveys undertaken by the University of Maryland, the Chesapeake Bay Program and others-have shown us that people want a cleaner Chesapeake Bay, and recently many in Maryland have demonstrated their willingness to participate in the Bay cleanup effort by attending Tributary Strategy meetings held throughout the state. Further, farmers and others have demonstrated their commitment by implementing certain "best management practices" and by agreeing to reach specific nutrient-reduction targets and goals.

As was made clear at many Tributary Strategy meetings, citizens realize that reaching these goals will cost money. At those meetings and elsewhere, many people identified financing as one of the key issues in the implementation of the Bay restoration effort. Though many have expressed a willingness to pay, they want to know where the money will come from, and how we can ensure that it is raised equitably and spent wisely.

The Funding Gap

The effort to protect and restore water quality in the Chesapeake Bay currently costs approximately $200 million a year in Maryland, a sum derived from federal, state, local and private sources. The State estimates that about another $60 million a year is needed to implement the activities identified in the Tributary Strategies which will enable us to reach the 40% reduction goal necessary to restore the health of the Chesapeake Bay. Estimates of the "funding gap" are only that estimates-since exact methods of implementing a wide range of projects, from shoreline erosion controls to better stormwater management systems to improved agricultural practices, can vary widely. The Panel and its staff used averages and historical rates of expenditures to calculate costs. Of course costs can change over time, depending on several factors. With inflation, the price tag for most practices will likely rise in the future. Moreover, putting off implementation of the practices needed to protect and restore water quality in the Bay and its rivers will result in further deterioration and higher costs when those problems are finally confronted.

The Charge To The Blue Ribbon Panel

To address the issue of funding the cleanup of the Chesapeake Bay, Governor William Donald Schaefer appointed, in June, 1994, the Blue Ribbon Panel on Financing Alternatives for Maryland's Tributary Strategies. The appointment of this Panel represents an important step in the continuing commitment on behalf of Maryland and its sister states in the watershed to restore what has historically been perhaps the most productive estuary in the world. The Panel, chaired by Eileen Rehrmann, County Executive of Harford County, is comprised of 22 representatives from the agricultural, banking, business, environmental and finance communities, and state and local governments. This group debated a range of new and alternative methods for financing nutrient reduction activities and developed a menu of recommended options. The four major categories of the Tributary Strategies for which funding options were developed are: Point Source (biological and chemical nutrient removal) Developed Land (e.g., stormwater management; erosion and sediment control; septic systems management) Agricultural Lands (e.g., soil conservation and water quality planning; fertilizer, organic waste and animal waste management; conservation tillage) Resource Protection (e.g., forest conservation and tree planting; buffers; shore erosion controls; marine pumpouts; education)

Currently, Tributary Strategy practices in these areas are financed through a variety of federal and state programs, local cost-share contributions, and costs born directly by the private sector. But these funding sources, as they exist, can only cover a "business as usual" level of effort inadequate to the challenge of significantly improving the health of the Chesapeake Bay. As recognized by the Tributary Strategies, current nutrient reduction practices will have to expand if Maryland is to meet its 40% nutrient reduction goal and restore the Bay's vitality.

Identifying new funds (or existing funds which could be used in new ways) to cover this shortfall was the main focus of the Panel.

The 1983 & 1987 Chesapeake Bay Agreements

To understand the current approach to restoring the Bay and its tributaries-and the development of strategies for funding that restoration-one must understand the background for the current Tributary Strategies.

The current effort to restore the Chesapeake began in 1983, when the governors of Maryland, Virginia and Pennsylvania, the Mayor of the District of Columbia, the Chair of the Chesapeake Bay Commission and the U.S. Environmental Protection Agency signed the historic Chesapeake Bay Agreement, a broad but firm commitment to restore the Chesapeake to its former health and productivity.

In December of 1987, the signatories of the original Bay Agreement expanded the scope of their agenda with the addition of 29 commitments to action, outlined under the following six areas:

• Living Resources
• Water Quality
• Population Growth and Development
• Public Information, Education and Participation
• Public Access
• Governance

In addition, the 1987 Bay Agreement called for a 40% reduction in the amount of nitrogen and phosphorus flowing into the Bay by the year 2000.

The 40% nutrient reduction goal, measured against 1985 base level nutrient flows, become a key element - and is often highlighted - because reducing nitrogen and phosphorus remains central to the larger goal of the 1987 Agreement: to restore the abundance, variety, and productivity of plants and animals known as the Bay's "living resources." As is now widely understood, excessive nutrients in the Bay cause algae blooms, which block sunlight and lead to the loss of underwater grasses, which provide important habitat for crabs and a wide variety of fish. In addition, as algae fall to the Bay floor and decompose, they rob the water of oxygen, making it even more difficult for fish and other species to survive.

The improvement and maintenance of water quality are the single most critical elements in the overall restoration and protection of the Chesapeake Bay. Water is the medium in which all living resources of the Bay live, and their ability to survive and flourish is directly dependent on it.

-1987 Chesapeake Bay Agreement

The 1992 Amendments To The Chesapeake Bay Agreements

"The Tributary Strategies"

The 1992 Bay Agreement Amendments turned attention to the rivers, focusing on pollution control in the Bay's tributaries as a way of improving water quality in the Chesapeake mainstem. Under the Tributary Strategies, Maryland's portion of the Bay watershed is divided into ten sub-basins, each of which has been assigned a 40% nutrient reduction goal. For each of the ten sub-basins, a draft plan has been developed to reduce nitrogen and phosphorus to 40% below the 1985 levels by the year 2000. Future efforts, beyond the scope of the existing draft strategies, will be necessary to maintain this level of reduction thereafter, in light of continued population growth (estimated at 18% by 2020 statewide). In each of Maryland's ten tributary watersheds, partnerships have been established among state and local government officials, citizens, and members of the agricultural, business, and environmental communities to work on nutrient reduction plans. Draft Tributary Strategies were reviewed and discussed at public hearings across the state in the spring of 1993 and 1994. These plans will be the framework for implementation of activities conducted by the public and private sector, with the help of "Tributary Teams" representing the stakeholders in each tributary.