‘Rain tax’ still around, despite its repeal
Eliminating the “rain tax” — the stormwater fees that the state’s 10 largest jurisdictions were required to charge property owners — was the signature achievement of Gov. Larry Hogan’s first legislative session. But while Republicans are celebrating the fulfilment of a key campaign promise, most property owners in the Baltimore region will still pay the fees.
Since November, when voters sent Hogan and other Republicans to Annapolis on pledges to repeal the fees assessed to homeowners and businesses, only conservative Harford County has actually eliminated them.
While the General Assembly agreed to lift the demand that Baltimore and the nine largest counties charge the fees,
state law still requires them to come up with the money for projects to safeguard and improve the health of the Chesapeake Bay.
Baltimore County cut its fees by a third. Two attempts to eliminate them in Anne Arundel County fell short. Howard County is waiting at least a year to make changes. And there’s been no move to make any changes in Baltimore City.
Carroll County instituted a $0 fee before the election. Officials there agreed to dedicate a portion of the county’s property tax revenue to stormwater cleanup projects.
Republicans who chafed at being told how to pay for stormwater projects can still claim a victory on principle. Baltimore and the counties still are required to restore streams, plant trees and do other work to fight the runoff of pollution to the bay. But now they can decide for themselves how to pay for it.
“It gets rid of the mandate,” said Joe Cluster, executive director of the Maryland Republican Party. “Government mandating to the locals that they have to do something is bad government — especially when only 10 counties have to do it.
“Now each county can determine whether or not they have a rain tax. We still think it’s a stupid tax, but the ability for counties to repeal it is a good thing.”
Hogan called the repeal of the fees — not as he proposed it, but in a version sponsored by Senate President Thomas V. Mike Miller Jr. — one of the principal successes of his first General Assembly session.
“We did not get everything we wanted and the legislature did not get everything it wanted,” the governor said in a statement. “But Marylanders will benefit from the passage of the repeal of the rain tax, important improvements in our charter school law and tax relief for retired military.”
Environmentalists — who initially opposed changes in the stormwater fee mandate — say they’re OK with the version that passed, because counties still have to complete stormwater pollution projects, must document how they’re paying for the work, and can be fined for failing to comply.
Alison Prost, executive director of the Chesapeake Bay Foundation for Maryland, said environmentalists worked to get the proposal from an outright repeal of stormwater fees to the version that passed.
With so many candidates last fall blasting the fees, Prost said, “there was a worry that some of these elected officials could go as far as prohibiting anyone from collecting the fee and doing away with the stormwater programs.”
In the end, she said, the bill awaiting the governor’s signature ensures that the stormwater work continues.
“We gave flexibility in how you amass the dedicated funds, but we reaffirmed the responsibility and requirements and accountability,” she said.
The bill applies to Maryland’s 10 largest jurisdictions, which already must follow federal requirements for cleaning up their polluted runoff.
Stormwater is a vexing source of pollution in the bay, because it is the one source that is increasing, and projects to curb runoff are expensive.
It’s unclear what effect the state law will have on each county’s fees, which range from a penny per year in Frederick County to tens of thousands of dollars for large businesses in other jurisdictions.
Carroll County received state approval last year to forego the stormwater fee and dedicate a portion of property tax revenue to funding stormwater projects instead.
Harford County is headed down a similar path after repealing its fee in January and choosing to pay for the projects with revenue from its real estate recordation tax instead.
“We did not wait to see what the state was going to do,” County Executive Barry Glassman said.
Glassman, a Republican, attributed Harford’s success at eliminating the fee to having an all-Republican county council and a backup plan for funding stormwater projects.
“It just resonated,” he said. “It was one of those issues that a lot of small businesses and residential folks just thought was an unfair tax.”
The county plans to use proceeds from the recordation tax to stabilize stream banks and turn old stormwater holding ponds into wetlands, among other work.
Howard County Executive Allan H. Kittleman says the new law might help in his eventual efforts to repeal his county’s fees, which range from $15 to $90 per year for homeowners.
He said the bill language passed in Annapolis will make it easier to win public support and votes in the county council to repeal the fee and find money for projects somewhere else.
“Having [the fee] officially off the state law can’t hurt,” he said.
Kittleman said his staff will spend the next year looking for other ways to fund stormwater projects before he tries to repeal the fee. He campaigned on eliminating the fee, but held off after a committee reviewed county finances and recommended against it.
“We’re working on it. We’re looking at it. I don’t like the fact we have a stormwater remediation fee,” Kittleman said. “We have to be practical and pragmatic.”
Baltimore County cut its fees by a third this year after costs for the county’s projects came in lower than expected. Homeowners will now be charged between $14 and $26 per year.
In approving the cut, the Baltimore County Council required the county to review the fees following any changes made by state lawmakers. But County Executive Kevin Kamenetz has firmly supported keeping the fee to pay for the projects, which have ranged from stream restorations to street sweeping.
“It made sense to reduce the stormwater fee because we were able to find significant cost savings,” Kamenetz, a Democrat, said in a statement. “Eliminating the fee would cause us to dip into funds we use to build schools and fix roads, because we still need to meet state and federal environmental mandates.”
Anne Arundel County Executive Steve Schuh’s efforts to eliminate the rain tax have fallen short. The Anne Arundel County Council defeated two fee-repeal bills earlier this month.
“Taxpayers sent a clear message in November that they are sick of the never-ending cycle of taxes and fees,” said Owen McEvoy, a spokesman for Schuh. “Given the political climate of the state, we thought maybe there might be some momentum behind it.”
Dozens of local environmentalists filled the council chambers to urge the seven council members to keep the fees. The council’s three Democrats and one of the Republicans voted to keep the fees.
Schuh, a Republican, now plans to focus on cutting county property taxes by 3 percent — his main campaign promise — to give his residents a different form of tax relief.
“The fact that these measures failed is even more of a reason to have a property tax cut,” McEvoy said.
Cluster, the state GOP director, said he hopes the passage of the state legislation will nudge counties including Anne Arundel to “vote to get rid of [the fees] or bring it down to a level that has a negligible effect on the taxpayer.”
Baltimore City and other Democratic jurisdictions, including Montgomery, Prince George’s and Charles counties in the Washington suburbs, have shown no interest in reducing or eliminating their fees.
In Charles County, property owners have been charged a flat $43 stormwater fee. It’s due to go up to $47 this summer.
“When it first came out in the first tax bill, there were a lot of questions about what it was and what it was used for,” said Charles Rice, the county’s environmental programs manager.
Rice said there’s been no push to reduce or cut the fees. “I think because we have a flat rate which is relatively inexpensive … there’s been less controversy,” he said.
Montgomery County established a stormwater fee more than a decade before the state bill. Homeowners pay an average of $88.
“The majority of people accept the fee,” said Vicky Wan, who manages Montgomery’s fee program. “They’re fine with it.”
“Having [the fee] officially off the state law can’t hurt.” Howard County Executive Allan H. Kittleman