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Rain, Rain, Go Away – Before O’Malley Taxes Us Another Way

Why is Maryland rolling over for the EPA’s “Rain Tax” when Virginia successfully fought and won?

Chesapeake Bay Maryland Rain Tax“The best things in life are free, but sooner or later the government will find a way to tax them.” Anonymous

The Federal Pollution Control Act of 1972 was a landmark decision to control pollutants pouring into our waterways from commercial and farming operations.  However, after decades of policing “point sources the EPA did not realize its targeted reductions in water pollutants, and decided to begin regulating nonpoint source pollution“caused by rainfall or snowmelt moving over and through the ground.”

The EPA merrily passed down unfunded mandates on a state-by-state basis to regulate rain water runoff; in 2010 the EPA ordered Maryland to reduce storm water runoff (regardless of whether or not it contains pollutants) into the Chesapeake Bay in an effort to reduce phosphorus and nitrogen levels by 15% and 22%, respectively.

The cost to implement these programs in Maryland alone is estimated at $14.8 billion.  Of that amount $1.8 billion is Frederick County’s share to be met “by 2025, according to figures provided by the county.

Virginia’s response to their mandate was to take the EPA to court, declaring the agency had overstepped its bounds in attempting to regulate rainwater as a pollutant.  Virginia won their case, and the EPA elected not to appeal the decision.

Maryland’s response to the mandate should come as no surprise to anyone who lives here.

This past July, the Maryland State Legislature passed House Bill 987, titled the “Stormwater Management – Watershed Protection and Restoration Program.”  The law requires Maryland’s 9 largest counties (Anne Arundel, Baltimore, Carroll, Charles, Frederick, Harford, Howard, and Prince George’s) and Baltimore City  to establish a storm water utility fee by July 2013.

This “fee” is to be implemented on “impervious surfaces” such as roofs and driveways that prevent rainwater and melting snow from seeping back into the ground.  (Everyone from the EPA to local municipalities is adamant that this be called a “fee” so that it can’t be challenged as a disguised and unlawful tax.  But who are we kidding here.)

When faced with the gargantuan price tag, Governor O’Malley played “pass the unfunded mandate” without offering any meaningful plans or assistance to the 10 municipal administrations and staff tasked with raising funds to meet it.  Please unleash that creativity was about the only advice this presidential hopeful was able to muster.

What unleashed instead was a storm of controversy, as each of the counties named in the mandate began scrambling to find a way to make storm water management fees palatable in a state already burdened with taxes—or fight them altogether.

Frederick County Commissioner Kirby Delauter went so far as to say he would rather be jailed than impose this fee, but ultimately Frederick’s Board of County Commissioners voted to rebel by proposing a nominal fee of $.01 per year per eligible property owner across the board—thus meeting the letter of the law if not the intended spirit of the program.

The reluctance of Frederick’s county commissioners to adopt a more robust Stormwater Utility Fee structure as other Maryland counties have done isn’t a publicity stunt to fight more taxes from the O’Malley administration.  Maryland’s stormwater utility fee doesn’t make sense on a number of levels:

  • It places an unfair burden on only part of our state, when all its citizens enjoy the fruits and recreation of the Chesapeake Bay.
  • According to Frederick County Commissioner President Blaine Young, municipalities, which typically have a significantly higher percentage of impervious surfaces than non-incorporated areas within counties, are exempt from the state’s  regulation.  Mr. Young has a very interesting theory about why that came to pass, and it has nothing to do with saving the Bay from pollutants … more like saving the state from conservatives, he believes.
  • It doesn’t regulate or solve the problem of massive amounts of pollution that flow into our waterways from states north of Maryland (I’m talking to you, Pennsylvania).
  • Nonprofits and religious institutions were not exempt by Bill 987.
  • In order for a “fee” to be regarded as a fee and not a tax, the government has to prove that the program cost is commensurate with the value of that service (which the EPA has failed to do, as there is no proof that reducing storm water runoff is going to generate the targeted reductions in nitrogen and phosphorus pollution) AND that the funds raised will be segregated for that program and not raided for other purposes (remember the raid of the Maryland Transportation Trust Fund?  Anyone? … Anyone?).
  • There are no “opt-out” provisions for properties with large storm water management facilities on-site or credits for properties that don’t contribute to the public storm water system.

Rob Lang wrote an excellent explanation of how this bill was passed seemingly right under our noses. But how is it that a state with supposedly “the best schools and most educated workforce in the country” can’t develop a more equitably-funded and effective solution to phosphorus and nitrogen pollutants?

When you look closely at the holes in this program it begs the question:  is Bill 987 really about saving the Chesapeake Bay?  Or is it a political play that puts a bid for the White House squarely in Governor O’Malley’s sites?

After all, it would make more sense (and ultimately prove far cheaper) to develop a phosphorus-free fertilizer for use by the Eastern Shore farms.  Fertilizer run-off is a huge part of the pollution problem, yet southern Maryland’s huge farming operations are not being levied with fees under this program—that would be political suicide for the O’Malley administration and fiscal suicide for the farms themselves.

Why can’t the brilliant environmental scientists at the EPA come up with something more effective than attempting to corral the rain?

A public hearing will be held on Thursday, May 30, 2013 at 10 a.m. in Winchester Hall regarding the proposed Stormwater Utility Fee of $.01 for Frederick property owners.

Is agreeing to pay even a penny in “rain tax” sending Frederick down a slippery slope that will eventually put us all on the hook for millions, if not billions, of dollars of stormwater mitigation programs we cannot begin to afford?

Let your voice be heard, lest Governor O’Malley will be taxing the wind.  Oops…too late.

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The authors: Rocky Mackintosh is President of MacRo, Ltd., a Land and Commercial Real Estate firm based in Frederick, Maryland. He also writes for  Kathy Krach is a commercial sales and leasing agent with MacRo.

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