This article provides an overview of the history and requirements of the Maryland law requiring certain counties to adopt a stormwater remediation fee (labeled as a “rain tax” by some of the legislation’s opponents). The affected counties must adopt the fee by July 1.
Prior to 2012, all counties and municipalities were granted authority via state statute to enact a local stormwater management fee and Montgomery County and several municipalities did so. Certain other counties included stormwater funding components as part of their property taxes or other revenue sources.
The federally mandated Chesapeake Bay Total Maximum Daily Load (TMDL) imposed significant new stormwater mitigation requirements on the states within the Chesapeake Bay watershed, including Maryland. As Maryland crafted its Watershed Implementation Plan (WIP) in response to the TMDL requirements, the State shifted the responsibility for meeting the stormwater pollution reduction targets onto the counties. However, no commensurate State funding was created to help assist counties in meeting their new stormwater goals.
Recognizing the lack of a local funding source, the environmental community unsuccessfully supported legislation during the 2009, 2010, and 2011 Sessions that would require local jurisdictions to enact a utility fee for stormwater mitigation purposes. The community was successful in the 2012 Session with the passage of HB 987. Initially, the bill required all counties and municipalities to adopt a local fee . MACo opposed the bill, noting that counties and municipalities already had the authority to enact a local fee and that stormwater runoff is not a major Chesapeake Bay pollutant in some counties. Certain counties did testify in support of the bill.
When it became clear that HB 987 was going to pass the House, MACo proposed an amendment limiting application of the bill to counties that supported the bill. The House passed HB 987 with a modified version of the MACo amendment, limiting the bill to those counties subject to a National Pollutant Discharge Elimination System (NPDES) Phase I Municipal Separate Storm Sewer System (MS4) Permit. Additional House amendments required the counties to create an offset system that provides a credit for stormwater mitigation activities on the property undertaken by the property’s owner and also to provide for a hardship exemption. MACo offered further amendments in the Senate to address implementation challenges created by the additional House amendments, including removing an annual inspection and monitoring requirement. The General Assembly passed HB 987 with the MACo amendments.
Ten counties are currently subject to the requirements of HB 987: Anne Arundel, Baltimore City, Baltimore County, Carroll, Charles, Frederick, Harford, Howard, Montgomery, and Prince George’s. However, additional counties will likely become NPDES Phase I MS4 permit holders in the future as their population increases or federal water pollution controls under the permit system are tightened. While the bill does not contain an explicit penalty if a county fails to adopt a fee, the Maryland Department of the Environment has previously stated that it believes it has the authority to levy civil and administrative fines against counties that do not comply with the July 1 adoption deadline.
The Senate also exempted State and local government properties from having to pay the fee. While the exemption made sense for the affected county governments as they are already required to mitigate their stormwater runoff under the NPDES Phase I MS4 permit, the exemption of State property allowed federally owned properties to argue that they were also exempt from the local fee.
In response to the blanket exemption of State properties and the associated challenge to the fee by federally owned properties, HB 508 of 2013 sought to subject property owned by the State to a stormwater fee levied by a county or a municipality, subject to certain restrictions. Property owned by the Maryland Department of Transportation, including roads, and the University System of Maryland would be exempt from the charges. MACo supported the bill with amendments worked out by the State and other stakeholders that would require State properties not subject to either a NPDES Phase I MS4 permit or an industrial stormwater permit to pay the local stormwater fee. State properties subject to either permit could also pay the fee if both the State and county mutually agreed.
The House passed HB 508 with the amendments supported by MACo. However, the bill became controversial in the Senate due to increasing public awareness of the 2012 stormwater fee requirements. The Senate amended HB 508, deleting the new House language and instead prohibiting counties that had not adopted a fee before January 1, 2013 from assessing the fee before July 1, 2015. The amendments also required local governments to provide public notice of the schedule of fees by July 1, 2014 and created a workgroup to study whether the fees should apply to State and local government property. The amended bill passed the Senate but did not make it back over to the House before the end of Session.
Current Status of County Stormwater Fees
MACo has prepared a chart summarizing the current status of stormwater fees for the 10 affected counties. Baltimore, Frederick Harford, Howard, and Montgomery Counties have all enacted stormwater fees. (Montgomery did not create a new fee but modified its existing fee to be consistent with the requirements of HB 987.) Final legislation is still pending in Anne Arundel, Baltimore City, Carroll, Charles, and Prince George’s.
When determining fees for non-residential properties, most counties are assigning a property a number of equivalent residential units (ERUs) based on the square footage of the property. The fee is then based on the number of ERUs.
Ongoing Controversy and Possible 2014 Legislation
The general public, non-profits, and businesses did not raise significant concerns with the passage of HB 987 but have become increasingly concerned as counties vetted stormwater proposals through their public processes. This led to some legislators expressing a desire to revisit the issue during the 2014 Session. A June 12 Towson Patchblog post highlights the concerns of Senator Ed Kasemeyer, chair of the Senate Budget and Taxation Committee:
“I think it’s not over yet,” Kasemeyer told the Howard County Chamber of Commerce during a meeting late last month. “As this thing plays out, you’ll see something from the legislature.” …
Kasemeyer, who voted in 2012 for the bill that created the tax, said the bill may have been enacted too quickly.
“I think it should have been delayed, frankly, to make it more uniform, to understand the impact on nonprofits, impact on business,” Kasemeyer said.
While MACo has not taken a formal position on any possible revisions to the stormwater fee requirements, MACo does note that the county costs for meeting the stormwater requirements under the Bay TMDL are significant (estimated at $5.9 billion in the fiscal note for HB 508) and do vary greatly even among the urban counties. Any uniformity requirement should be commensurate with each county’s stormwater TMDL costs. If the fee is capped for businesses or non-profits, counties may be forced to make up any shortfall by raising other revenue sources, including property and personal property taxes.