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May 2013:

Rain Tax Starting to Stir Up a Storm

May 6, 2013

Posted in: News

Death and taxes may be inevitable, as the old saying goes, but rain and taxes?

“Stormwater remediation fee” sounds pretty benign, if obtuse. If opponents of this mandate on the counties the General Assembly passed last year had been able to reframe this fee as the “rain tax,” their arguments might have had more impact.

This “rain tax” is a stealth issue that has been creeping up on us. The charges are supposed to go toward reducing pollution from stormwater on impervious surfaces — in other words, rain falling on driveways, roofs and parking lots. The legislation is designed to implement measures to meet federal guidelines for cleaning up the Chesapeake Bay.

The rain tax will really hit when home and business owners open their property tax bills July 1 and see the charges that could range from hundreds to thousands of dollars. (The Anne Arundel County column deals with what will happen there.)

The coverage of the issue as it traveled through the legislature in 2012 was less intense than it might have been, because its impact was vague. The legislation told nine metropolitan counties and Baltimore City that they had to collect the fee, but the bill laid out no guidelines for how much it should be or how it should be calculated. It required that the money go into a “local watershed protection and restoration” funds, but provided only broad outlines for how the funds should be used.

The counties were left to come up with their own solutions. In Howard County, for instance, the council passed, and the executive signed, a bill establishing $15 per 500 square feet of impervious surface. The fee can be waived or reduced if the owner has a remediation plan in place.

In Frederick County, where the commissioners hate the state mandate, the fee is just 1 cent (yes, $.01) per year per property. That’s less than $500 for the whole county, though the state may frown on this token payment.

Legislators Promise Action

Legislators are beginning to hear from constituents as interest in the issue heats up, particularly from business owners and churches, which also would have to pay the fee.

“As you see this thing played out, the legislature will do something,” Senate Budget and Taxation Committee Chairman Ed Kasemeyer told a Howard County Chamber of Commerce breakfast last month. It’s unclear when that might happen, since the legislature is not scheduled to meet again until January.

Will there be pressure for a special session when tax bills hit mailboxes in July?

“I think it’s not over yet,” said Kasemeyer, who had sought to delay implementation of the fees for two years, amending a bill exempting nonprofit groups and churches from the charges. The Senate approved the amendment on the last day of the General Assembly April 8, but a House committee let the bill die.

“I think the legislature didn’t do an adequate job setting guidelines” on how the fees were to be applied, he said.

Sen. Jim Robey, a subcommittee chair on the tax-writing committee, said, “We have to go back and make this tax better.” (The legislation came out of the environment committees, not the tax committees.)

As one extreme example, Robey noted that the huge car import facilities on the south side of the Port of Baltimore are facing fees of $400,000 per year.

Other legislators have been approached by pastors complaining of the fee. Del. Warren Miller (R-Howard) said one Clarksville church believes it will have to pay $30,000. And Del. Steve DeBoy said a priest at St. Augustine Church in Elkridge told him, “This tax is really going to hurt us.”

A Fee or a Tax?

There’s some pushback in Democratic and environmental circles about whether to call it a fee or a tax. It’s the kind of distinction Republican Gov. Bob Ehrlich tried to make when his proposal for a fee to finance the Chesapeake Bay Restoration Fund was promptly dubbed the “flush tax.”

In the 2010 election, Gov. Martin O’Malley campaign ads ridiculed the distinction, with folks saying a fee was a tax if it came out of their pockets.

There is still a reasonable distinction. You pay a fee when you get some kind of direct government service that someone not getting the service doesn’t pay for, such as the fees for birth certificates, a driver’s license or in the case of Howard County, trash collection.

But when it is a generalized charge that supports government in general and from which all residents benefit, it is reasonable to call it a tax, even if it goes into a dedicated fund. Hence the flush tax, and now, the rain tax — both dedicated to cleaning up the bay, whether you use it or not.

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