Does the Maryland “Rain Tax” Affect You?

by

June 27, 2013

Rain Tax MarylandIn 2010, the U.S. Environmental Protection Agency ordered states in the Chesapeake Bay watershed, including Maryland, to reduce storm water runoff into the Bay. Each state in the watershed is allowed to come up with its own funding method for this initiative. The cost for Maryland is estimated at $14.8 billion. In 2012, Maryland’s General Assembly voted to use storm water management fees in order to cover this mandated cost. These new storm water fees are the controversial “rain tax” that has been getting so much press.

The fees are limited to ten Maryland counties (Prince George’s, Howard, Anne Arundel, Carroll, Harford, Charles, Frederick, Montgomery, Baltimore County and Baltimore City). Each jurisdiction must establish a storm water fee and create a dedicated fund to be used for storm water management. The fees go into effect July 1, 2013. As of mid-June, Baltimore City Council had not voted on its final proposal. Other counties have passed measures and then modified them.

In general, the fees are based on the amount of “impervious” surface that results in storm water runoff. Examples of impervious surfaces are rooftops, driveways, patios, sidewalks, and roads. Each jurisdiction has developed different tax rates and definitions of impervious surface areas. Residential property may be assessed at different rates than commercial property. State and local governments are exempt as well as are volunteer fire departments. However, churches and non-profit organizations are subject to the fees.

The amount of the storm water fee you will pay depends very much on where you live or where your business is located. For example, Howard County has set its fee for $15 per 500 square feet of impervious surface whereas Baltimore County has a fixed rate of $39 annually for a detached single family home and $21 for a townhouse. The Frederick County storm water fee was set by the Board of County Commissioners at $0.01 per year per eligible property which covers both residential and commercial properties .

The fees will be collected in various ways depending on the jurisdiction. For example, in Howard Country, they will be included on the annual property tax bill. In Baltimore City, they will be collected quarterly through the water bill.

The funds will go to the local jurisdiction to administer. The intent is to use the proceeds to benefit the Chesapeake Bay and to reduce pollution. The funds will be used for infrastructure maintenance, repairs and improvements.

The “rain tax” is new. There has been much controversy regarding the storm water fees and it is likely that there will be changes to them in the future. State residents and businesses will be given opportunities to lower their fees by participating in storm water remediation projects. For home owners this could mean installing rain barrels or rain gardens. For businesses, this could mean using permeable materials for parking lots and other paved areas. Since the fees are so new, details on these credit programs are not available in all jurisdictions.

For more information on the storm water management fees, contact your local County government or the Maryland Department of the Environment.


Article By: Lee McIntyre, Tax Manager and Nawaz Ahmed, Staff Accountant

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