Maryland’s Rain Tax Mandate Washed Away

April 14, 2015

Two years after new stormwater remediation taxes rained down on Marylanders, a deluge of legislators—184 of them across both chambers, with one opposed—voted to pull the plug on the state’s Rain Tax mandate, though not necessarily on the tax itself.

As late as mid-March, the fate of any proposal to scale back the rain tax was uncertain, with House Speaker Michael Busch (D) seen as a potential obstacle to passage. The Speaker had previously vowed to “stand firm” against Rain Tax repeal, although the bill that passed on Monday fell short of actual repeal—as floated by Governor Larry Hogan (R) during his campaign—instead eliminating the tax mandate imposed on large localities. In retrospect, the Rain Tax mandate had been circling the drain ever since the unanimous Senate vote on March 20th. But now, with the bill headed to the Governor’s desk, it’s worth taking a step back to see what the legislation really does.

In 2013, Maryland enacted legislation requiring the ten largest jurisdictions in the state to impose “stormwater management fees” to generate revenue to fund remedial measures to limit the amount of pollutants entering the Chesapeake Bay. The legislation was designed as a response to an Environmental Protection Agency (EPA) mandate for the entire watershed—all or part of Maryland, New York, Pennsylvania, Virginia, West Virginia, and the District of Columbia—stipulating reductions in nitrogen, phosphorous, and sediment runoff into the Bay through regulations for stormwater runoff. Each jurisdiction has flexibility in methods and funding mechanisms adopted to remain under these limits, known as the Total Maximum Daily Load (TMDL).

(Interestingly, in 2013 a federal district court ruled that stormwater does not meet the definition of a pollutant for TMDL regulation under the Clean Water Act, thus greatly limiting the requirements actually imposed on state and local jurisdictions. The EPA declined to appeal.)

Maryland, controversially, chose to require localities to levy a stormwater fee (really a tax), over the objections of some of the affected jurisdictions. These “fees,” as the Washington Post observes, can range “from $15 for a condo owner in Howard County to thousands of dollars for a business in Baltimore County.”

Frederick County chose to adopt a tax of 1 cent per year in protest. (Per state law, those demonstrating severe financial hardship may seek an exemption from the 1 cent levy.) Carroll County defied the requirement outright, refusing to impose the tax. After a protracted standoff, state authorities relented, whereupon Hartford County moved to repeal its own rain tax.

Repeal of the rain tax was a centerpiece of Hogan’s campaign, and the Governor unveiled repeal legislation two months ago. The bill headed to his desk, sponsored by Senate President Mike Miller (D), falls short of repeal, but it does eliminate the mandate, allowing each of the state’s large jurisdictions to decide whether or not to levy the tax.

The legislation does not relieve the state or its localities of the obligation to invest in stormwater remediation. It does, however, grant greater flexibility in meeting those obligations, which can be funded through general revenues.

As structured, the rain tax was far from neutral, imposed by state mandate in some counties but not in others. By making its imposition optional, the legislature has not ensured neutrality. Presumably some counties will continue to levy the tax. But now, pending the Governor’s signature, it will be a local decision—one for which local government officials are responsible to the voters—rather than an inconsistently applied state mandate.

More on Maryland here.


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