(Feb. 20, 2015) Fans of catchy campaign promises everywhere may soon get their closure, as Gov. Larry Hogan embarks on his pledge to eliminate Maryland’s so-called “rain tax.”
But even if Hogan is successful with what will likely be a battle with the State Senate in the coming weeks, the core issue of how to address stormwater management throughout the state – including Ocean City – won’t be going away anytime soon.
“The situation remains that we have a lot of corrugated metal [storm drain pipes] that were laid down by developers in the ’70s and ’80s, and that infrastructure is now starting to fail,” said City Engineer Terry McGean.
From the inception of the policy under former Gov. Martin O’Malley, the term “rain tax” has been somewhat misleading. A tax on rain would imply that one pays more money the more it rains, and that this money would be used by the state for whatever Annapolis felt like. None of this is the case.
Rather, what the rain tax does is legislate the implementation of a stormwater utility. This would be the same as any other publicly managed utility, such as water or sewer, but would charge a fee for properties to use public storm-drain systems to remove rain runoff permitted by their land.
The greater proportion of non-absorptive surfaces a parcel has – such as buildings and blacktop – the higher the levy on that property. This money would then be used to pay for maintenance of the storm drain system.
Under O’Malley’s legislation, only certain jurisdictions were required to implement a stormwater utility. Others were given financial incentives to do so.
The counter-argument to this policy is that the state should not be in the role of pushing a utility system on jurisdictions that may well be able to address their infrastructure needs in other ways.
“Forcing certain counties to raise taxes against their will on their citizens was a mistake that needs to be corrected,” Hogan was quoted as saying in the Washington Post.
Whether the state continues to be involved in stormwater management, however, won’t change the basic reality – and financial burden – of upcoming stormwater infrastructure needs.
Ocean City is somewhat of a textbook case of the issue. Much of the city’s storm drainage, as well as other utilities and the roads themselves, was built by private developers as they expanded into more and more of the resort’s buildable space. This infrastructure, built to the city’s specifications, was then surrendered to the municipality.
Now, 30 years after the resort’s rapid expansion of surface area, most of this infrastructure is beginning to deteriorate, and the cost of fixing it falls on the city. The necessity of the matter is further complicated by the resort’s sea-level geography – no one can expect to turn a barrier island into a giant parking lot and not spend any money on drainage problems.
Currently, the city’s goal is to allot $2 million dollars every year out of the city’s general fund, which consists of property taxes and other unrestricted revenues, such as parking and franchise fees, for street re-paving. If the storm drain infrastructure in those streets needs repair, it is done in course.
For several years, the city’s capital improvement plan (CIP) has included an additional $1 million in user-fee-supported storm drain work, i.e., a “rain tax.” But this has not yet been implemented.
“In the CIP, there is a stormwater component of what we think needs to get done,” McGean said. “If we’re not going to create a stormwater utility, then you’re just going to have to add that cost into the paving. Instead of needing $2 million a year, we’d really need $3 million per year.”
That number was generated by an infrastructure study done several years ago – by the same consultant who advised the state on future stormwater utilities.
The study even went so far as to outline a potential fee structure for Ocean City. Single-family residences would be charged a set fee. Larger structures would be charged in units based on the average impact of a single-family residence, known as “equivalent residential units” or ERUs.
“A hypothetical example would be, if we found the average home had 5,000 square feet of impermeable surface and your hotel had 50,000, you would be charged for 10 ERUs,” McGean said.
Previous city councils have been reluctant to proceed with such a system for two reasons. Firstly, a stormwater utility would charge properties based on physical area and not financial viability, which don’t necessarily go hand-in-hand. Funding stormwater work through the general fund, which relies on value-based property taxes, is a bit more egalitarian.
Additionally, municipal property taxes are tax-deductible, whereas utility fees are not, making the funding of stormwater work via property taxes marginally less expensive.
On the other hand, creating a utility would mean a dedicated, ironclad source of funding for stormwater work. Although the funding goal for street paving is $2 million, this current fiscal year is the first in which the council has managed to find that amount of funds. Previous years have fallen short, and none to date have included an extra $1 million to make up for the lack of a stormwater utility.
Although the practical need is there, the city is under no obligation from a higher agency to address its stormwater issues on a more rapid timeline.
What could change this would be environmental regulations. Stormwater picks up sediment accumulated in parking lots and roofs, which may contain various solubles, such as phosphorus and nitrogen, that affect water chemistry. The city has more than 100 outfalls that dump storm drains directly into the bay. Filtration and treatment methods for stormwater are available, but costly.
“There are prohibitions against putting anything other than rainwater in there, but rainwater can carry contaminants, especially after the first rain you’ve had in while,” McGean said.
Under the federal Clean Water Act, the Environmental Protection Agency has the ability, via individual state agencies, to control what is termed Total Maximum Daily Load (TMDL) for contaminants in certain waterways that are considered to be “impaired” by nearby runoff.
However, the federal mandate only requires that “adequate progress” be made toward TMDL goals. This creates a massive gray area as to what is actually going to be done, according to Dave Wilson, executive director of the Maryland Coastal Bays Foundation, which is intimately involved with the EPA and Maryland Department of the Environment in monitoring local water chemistry.
“It’s one of those cases where there’s a lot of gray area when you’re trying to determine how much work has to be done,” Wilson said. “Theoretically, anyone could go and sue the EPA or the state for violating the Clean Water Act by not making sufficient progress.”
Under such a circumstance, the state could end up legislating stormwater monitoring or the establishment of some kind of quota.
“My guess, if anything, is that the legislature would look at the TMDL numbers, and any municipality that didn’t obtain that would have to come up with some way to deal with it,” Wilson said. “But I don’t see that happening soon, at least not in the next four years.”
