Last week, a potential stormwater charge in another city ran into trouble. The Idaho Supreme Court ruled that the city of Lewiston’s fee is actually a tax and therefore unconstitutional.
We’ve had many discussions of the difference between a fee and a tax in the magazine and online; for years the issue has been a common stumbling block for would-be stormwater utilities. Cities generally have the ability to collect fees but not the authority to assess taxes. In many cases, a fee is defined as money collected for a specific purpose, such as stormwater services. If more money is collected than is required for that purpose and the excess is put to some other use, the charge can be considered a tax. In other cases, courts have considered whether the charge is voluntary—can rate payers opt out by choosing not to use stormwater services? This brief article provides a good summary of the issue.
In the Lewiston case, a lawsuit was filed against the city by five other government entities: a state college, a port, a school district, an irrigation district, and the county. Although the city can collect fees from such entities, local governments can’t tax each other. The state supreme court also seemed to place a great deal of emphasis on the non-voluntary aspect of the charge, stating that all property owners were charged regardless of whether they were using the existing stormwater system.
As disturbing at that might be for other cities contemplating a stormwater fee, there is another trend in the sluggish economy, also illustrated last week by the newly elected mayor of Jackson, Michigan. Martin Griffin has announced his intent to eliminate the stormwater fee that was instituted less than a year ago on the grounds that it’s just too expensive. “I talked to a small business owner. He said his rainwater fee is the equivalent of one employee a month,” Griffin said. “In this economy I think I'd rather have an employee.”
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