Murphy signs law allowing ‘rain tax’ on stormwater runoff
Counties and municipalities will be allowed to begin charging property owners for the water that runs off their land when it rains, under a bill signed into law Monday by Gov. Phil Murphy.
The new law gives local governments permission to establish stormwater utilities, starting in mid-September. Those utilities could collect fees that are intended to fairly approximate stormwater runoff resulting from impervious surfaces, such as parking lots.
“Unfortunately with long-time development, with a failure to voluntarily deal with stormwater infrastructure, we’ve gotten to the point where every time it does rain that there’s road salts and that there are bacteria from animal droppings, pesticides, just basically washed into our clean water. And it’s something that needs to be addressed,” said Assemblyman John McKeon, D-Essex.
“At the end of the day, whatever sum might be contributed by users, so to speak, based on impervious surfaces, it will get paid back 20 times over relative to again preserving the value of properties, helping to support our tourism industry and basically as it contributes to our long-term health,” McKeon said.
The New Jersey Business and Industry Association opposed the bill as an additional tax burden that comes with little clarity about how much people and businesses will be charged and how the funds will actually be used.
"This legislation essentially creates a new, non-deductible property tax on the public and another bureaucratic expense at the local level,” said NJBIA vice president of government affairs Ray Cantor. “Churches and non-profits, as well as residents and businesses, will all be susceptible to these added fees based on their patios, parking lots, driveways and roofs.”
Cantor said it’s possible that property owners could pay the fee twice, if their county and municipality both create stormwater authorities.
Dave Pringle, a spokesman for Clean Water Action, said the fee is voluntary, though he hopes most municipalities pursue it.
“It will be very much up to the local government, depending on what kind of plan they decide to take,” Pringle said. “It’s a voluntary measure, and the local government is very responsive to local folks. So they will be making sure that it is proportionate to the problem in the town.”
According to the nonpartisan Office of Legislative Services, a report by Black & Veatch Management Consulting found the average single-family residential stormwater fee in the United States in 2018 was $5.48 a month, or around $65 a year.
“Stormwater is a huge problem when it comes to flooding and contaminating our drinking water,” Pringle said. “We need to get a better handle on it. Folks at the local level are the best able to do that because of the sewers and the stormwater’s right there.”
McKeon said he anticipates that areas around Greenwood Lake, Lake Hopatcong and Barnegat Bay might consider stormwater utilities to deal with concerns about the health of their water. He also said Jersey City had expressed interest.
Chris Sturm, managing director of policy and water for New Jersey Future, said the land-use and smart-growth organization will work with local governments that want to create a stormwater utility.
"Gov. Murphy’s signing of the Flood Defense Act to give municipalities the option to establish stormwater utilities is a monumental step toward cleaner, healthier communities," Sturm said. "Towns and cities across the state struggle to manage flooding from stormwater and maintain clean waterways, but now they will have another tool to combat these issues.
The concept has been derided as a "rain tax" by critics such as Doug Steinhardt, the Republican Party state chairman.
"A rainy day fund used to be what responsible government collected for emergencies. Not anymore. Not in New Jersey. Now, it's just another Democratic property tax and Trenton money grab," Steinhardt said.
The law’s advocates say the "rain tax" nickname is unfair and inaccurate.
“Listen, ‘rain tax’ is just a sophomoric, Trump-like way in which to describe it,” McKeon said. “What it is is it allows communities to responsibly deal with stormwater in the same way that we deal with wastewater and in the same way that we deal with freshwater.”
“Shame on them. They know better,” Pringle said. “This is a voluntary measure, and it’s up to local government, working with local citizens, as to how they best can protect their town.”
Five percent of the annual revenues collected through the stormwater utility fee would have to be forwarded to the state, capped at $50,000 per utility. An additional 5 percent could be transferred to the local budget of the county or municipality.
A partial fee reduction would have to be provided to any property that complied with state or local stormwater standards that were in place at the time the system was approved, as well as to properties that follow best management practices in reducing, retaining and treatment stormwater onsite.
Farm and horticultural properties would be exempt.
In all, Murphy signed 19 bills into law Monday. Among the others are bans on stores that don’t accept cash and on employment contracts that contain nondisclosure agreements covering sexual harassment or discrimination.