Noting that "business as usual will not get us a cleaner Bay," a blue-ribbon panel has outlined options for closing a $60-million-a-year shortfall between what's available to finance Maryland's tributary strategies and what is needed.

The panel's report on "alternative" funding mechanisms listed 35 innovative techniques, ranging from "aquifer impact fees" that could be assessed on new septic tank systems to offering tax breaks for certain types of farm equipment.

The panel's goal was to offer a "menu" of financing ideas that can be"mixed and matched" to meet various needs. "No one idea alone can guarantee the success of our 40 percent reduction goal," the report said.

Right now, about $200 million a year is spent in Maryland on efforts to stem pollution to the Bay and protect Bay-related habitats, the report said. That figure includes state, federal, local and private expenditures on everything from sewage treatment plant upgrades and stormwater improvements to stream restoration and educational efforts.

Still, the report said, another $60 million a year is needed to implement the tributary strategies. The strategies are documents which have been prepared for each of the state's 10 major watersheds to guide nutrient reduction efforts.

All the Bay jurisdictions have committed to writing tributary-specific nutrient reduction strategies that would meet the overall Bay Program goal of reducing the amount of nutrients reaching the Chesapeake 40 percent by the year 2000. Too many nutrients in the Bay spur excess algae growth, which degrades water quality.

Of the states, Maryland has developed the most detailed plan for meeting that goal, but its draft strategies offered no means to foot the bill.

That led former Gov. William Donald Schaefer to appoint the Blue Ribbon Panel on Financing Alternatives for Maryland's Tributary Strategies last June to find ways to close that funding gap. The 22-member panel included state and local government officials, lawmakers, business representatives and others.

Gov. Parris Glendening, who joined Schaefer for the report's release in January, said he wanted to study the panel's recommendations.

"It's important for us to do this without imposing undue regulations or unnecessary costs on businesses," he said. At the same time, he added, "everyone benefits from the quality of life and clean water in Maryland, and everyone must be prepared to share in the costs."

Indeed, the panel's report said the options proposed would spread the cleanup cost across everyone in the state, affecting both those causing pollution and those who would benefit from the cleanup.

But the time to undertake the task, the panel said, is now. "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 report said.

The panel's recommendations covered four restoration categories: point source controls, such as sewage treatment plant upgrades; developed land, which includes stormwater controls and retrofits, septic systems, urban and suburban runoff, and other pollution from developed areas; agriculture, which includes farm runoff; and resource protection, such as forest conservation, shore erosion control and stream buffers.

The report offered ideas both for raising money, and for effective use of incentives that would help meet strategy objectives.

Though the panel offered nearly three dozen options, two suggestions were cited for each category: expanding the State Revolving Fund, and establishing a new environmental trust fund.

The State Revolving Fund, which is used to help finance construction of sewage treatment plant upgrades, could be set up to both receive more money and distribute it to more cleanup activities, the panel said.

Right now, the fund is financed by federal money, which is matched by the state. The panel suggested the fund could be further bolstered by borrowing from private institutions. With a broader base of money, the fund could be used to help finance - through low-cost loans - additional sewage treatment plant upgrades, expensive stormwater management improvements, and various urban and agricultural nonpoint pollution control projects.

The panel also suggested the creation of an environmental trust fund patterned after those in other states. The fund could receive money from one or several designated sources, ranging from environmental fines to fertilizer use fees. The fund could then make low-interest loans or provide economic incentives for various projects related to fulfilling the tributary strategies.

The report also offers a wide range of other ideas. It suggests, for example, that municipalities could consider selling some assets to the private sector, or form public-private partnerships to undertake expensive activities such as sewage treatment plant upgrades.

It suggests that special "utilities" be created to install and maintain stormwater management systems. Benefiting landowners would pay an annual fee of about $20 per year for the service.

Most of the options in the report would require legislative action.

The panel emphasized that "watershed districts" be formed for each major watershed that - at the least - could make recommendations about funding. In some cases, such a district could have power to issue bonds or collect revenues.

This approach is needed, the panel said, to most effectively use available money. For example, a small sewage treatment plant in a watershed may be eligible for State Revolving Fund money to reduce nutrient discharges. But if the major problems in that watershed were actually coming from agriculture, a properly structured watershed district might be able to use the sewage treatment funds to deal with the animal waste problem, and thereby have a greater impact on nutrient reduction.

"In short, watershed districts can offer greater flexibility for the funding of environmental programs specific to each watershed, and help to increase efficiency through economies of scale," the report said.

Copies of the report, "Financing Alternatives for Maryland's Tributary Strategies," are available from the Environmental Finance Center, Coastal and Environmental Policy Program, University of Maryland, 0112 Skinner Hall, College Park, MD 20742, (410) 405-6383.