Selectmen and Finance Committee to Go on Record With Recommendations This August
The discussion about how to fund compliance costs for an EPA imposed management plan continues in earnest this month. The Board of Selectmen have decided to delay their decision on whether to back a fee or a tax approach until their August 27, 2019 meeting. The Finance Committee will also opine on this issue at a meeting scheduled for 7.00PM at Town Hall on Tuesday August 13th. One issue for discussion is town counsel’s recent report, which endorsed imposition of the fee approach. However, the report contained information that would seem to undermine town counsel’s own position.
Town Counsel revealed that the Massachusetts Department of Revenue took issue with the “fee” approach. The Department has apparently informed the town that the proposed “fee” scheme is “a tax not a fee”. Additionally, town counsel’s analysis of the so-called “Emerson Rule”, a rule established by the Massachusetts Supreme Judicial Court, to differentiate between fees and taxes, offered substantial ammunition to anyone, who might seek to challenge the “fee”. The analysis presented a three pronged test, established by the state’s highest court, to determine the difference between fees and taxes.
One element of the test is “particularization”. Under this element, the town must show that any fee imposed on a rate payer, goes to support a service, which exclusively benefits the rate payer, and no one else. If it can be shown that the service offers benefits beyond the rate payer, the fee is a tax. Considering the fact that the stated intent of the storm-water program is to ensure clean water for the entire population, not just the rate payers, it would seem that an argument could be made that a fee system would fail this test.
A second test is “voluntariness”. The town must show that the property owners, who are assessed fees, have the opportunity to refuse the service. This is an extremely high bar that the “fee” proponents must clear. Town counsel has advised the Board of Selectmen, that property owners can avoid the fee by removing all impervious surfaces on their properties. Yet, this would be cost prohibitive for many. In order to avoid the fee, property owners would have to tear-up all their hardtop, and make significant modifications to their roofs. On its face this would appear absurd and hardly voluntary. The rate payers would be forced into these expensive modifications, because of a compulsion generated by state action. If the town’s property owners did remove or mitigate their impervious surfaces, and fees were avoided, the storm-water compliance effort would collapse according to Keith Reidling, the town’s consultant. It is obvious that the proponents of the “fee approach” are betting on this subtle, but effective element of economic coercion to fund their program.
The third test is “specific compensation”. According to the Emerson rule all revenue generated from the storm-water fees would have to replace all the funds currently applied out of the general fund to storm-water management. This is the lowest hurdle for storm-water fee advocates. However, it opens some very interesting issues. Under “specific compensation”, the money charged by the fees cannot be used to generate revenue for anything other than the service it purports to provide. The town manager has hinted that the fee based fund would free up approximately 650K in revenue to be applied elsewhere in the town budget. If that re-application were to occur, could the argument be made that the storm-water fee was in fact used to generate general revenue ? Proper deference to the “Emerson Rule” would seem to require a 650K rebate back to the taxpayers.
The Board of Selectmen are getting a bit anxious over this issue. Assurances were made to the town by Selectmen during a Town Meeting discussion last March. At that time the Board expressed their enthusiastic willingness to promote dialogue over this issue. However, at a July 23rd meeting, the Selectmen appeared all in on the fee system. Tom Clay, Scott Hazelton, Elizabeth Almeida, and Andrea Peraner Sweet all expressed their support for the fee system over all other approaches. Member Mark Kost was not at the meeting, but has led the effort to move the fee approach forward. For a moment, it appeared that the Board was going to vote in support of fees, in violation of their pledge to wait until August 15th. Finance committee members, who attended the Board of Selectmen meeting, scrambled to remind them of their commitment to wait until the following month to render a verdict. It was also strongly recommended that an opinion from the Finance Committee be received before the Selectmen take their final vote. This they agreed to do.