Cash-poor states in the U.S. are getting desperately creative when it comes to generating more wealth through new taxes. Just when you thought you’d heard of every tax imaginable, Democratic New Jersey Governor Philip D. Murphy has backed a scheme that will allow utilities and the state to make money from taxing the water that falls out of the sky.
That’s right. New Jersey residents will now pay a fee based on rainfall – or more precisely, excess rainfall that runs off instead of being captured and recycled back into the local water system for residential and commercial use.
Assemblyman Hal Wirths (R-Morris-Sussex) voiced what some of us were also thinking:
“Every time you think there’s nothing left to tax, we come up with something else. It’s just never-ending down here.”
The new law allows utility companies to levy a fixed rate on all properties which have extensive non-porous areas where paving or asphalt doesn’t let rainwater soak in: parking lots, long driveways, or big buildings. These non-absorbant surfaces produce the most rainwater runoff.
New Jersey’s 565 municipalities are now authorized to set up their own public stormwater utilities. The billion-dollar infrastructure project will institute a new government system to develop, monitor, control, and tax sewer systems and sewage treatment facilities for captured polluted storm water runoff.
Supporters of the new law say the additional revenue will be used to improve existing storm water runoff systems. But opponents believe some funding will be allocated to other unrelated projects.
Need it be said that New Jersey stands to gain from this conspiratorial scheme? The new legislation shunts 5 percent of the municipal surtax cash to the State.
In his March 2018 Letter Introducing the State of New Jersey Fiscal 2019 Budget Brief, Gov. Murphy pointed out that his state’s expenses and funding sources met both the letter and the spirit of the law:
“This budget meets my constitutional obligation to provide a plan that is fiscally balanced. However, it also meets our moral obligation to ensure it holds the values of our state and people within that balance.”
Gov. Murphy was candid with the state of New Jersey’s economy:
“We are beginning our climb out of a deep hole.”
Murphy attributed New Jersey’s financial deficit to several factors:
• Eight prior years of misprioritization of State funding
• Special interests won out over “the needs of working families”
• Public school budgets went without more than $9 billion needed
• New Jersey Transit “was hollowed out”
• The cost of higher education rose out of reach for many residents
• “We became weaker economically and less competitive.”
In 2010, during Barack Obama’s presidency, the idea to tax excess rainwater came from the U.S. Environmental Protection Agency (EPA) which “ordered states whose rivers and streams flow into the Chesapeake Bay to drastically cut sediment pollution.”
Maryland complied with that new federal environmental law in 2012 when a new bill that charged the cost of rainwater cleanup to property owners received “taxpayer fury.” Republican candidate Larry Hogan won his bid for governor with the campaign promise to repeal the “rain tax” in 2014.
The Maryland State Bar Association’s October 21, 2015, edition of the Bar Bulletin reported that the “water quality protection charge – also known as a stormwater remediation fee or ‘rain tax'” had been struck down on the legal grounds that the fee was not “reasonably related to the stormwater management services provided by the County.”
More recently, in May 2018, the Los Angeles County Board of Supervisors backed a Public Works Department project to create new infrastructure that could retain and recycle additional quantities of uncollected rainwater that now flows into the Pacific Ocean.
LA County Public Works Director Mark Pestrella saw “no dedicated source of funding for stormwater capture” so his solution to the problem his government identified was to have property owners foot the $300 million bill. Each square foot of non-absorbant real estate will be assessed an additional 2.5 cents. That’s $250 on a 100-foot square pavement.
LA County supervisors voted in July 2018 to include the rain tax for voter approval on their November 6 ballot.
Los Angeles County taxpayers will be charged “2.5 cents per square foot of ‘impermeable space’ on private property” to “fund the construction, operation and maintenance of projects that collect, clean and conserve storm water.”
Measure W – “The Safe, Clean Water Act” – passed in LA County on election day with 67.48% voter approval.
Supporters of the rain tax claim said that additional municipal water supplies are vital to support local residents. Furthermore, it will be easier for the county to meet EPA clean water regulatory standards.
Skeptics are troubled by the fact that this law, as written, never goes away. After 30 years, the program is subject to reevaluation and the possibility of a reduction in the rain tax. However, the law makes no such guarantees.
Peter Herzon with the Commercial Real Estate Development Association (NAIOP) said property owners now face “a brand new, permanent tax.”
Property owners can show that they already collect or treat storm water or have decreased the amount of runoff from their property can earn tax credits but bear the administrative overhead of recertifying each parcel’s eligibility every two years.
Qualifying low-income seniors and parcels owned by the government and nonprofits may file for a property-based utility tax exemption.
There is an online Safe Clean Water Program annual parcel tax calculator for real estate owners to predict how much additional money due under the new bill.
No matter where you live, many of us never imagined a day when they would tax the water that falls from the sky.
If you find this practice objectionable, speak up and let your elected representatives know that it’s not okay to create new bureaucratic systems whose purpose is to exploit additional natural resources at taxpayer expense. Don’t wait for a rainy day.