Another Bay budget crunch: Looming shortfall in "flush tax"
As if Maryland's fiscal woes aren't bad enough, it appears there's a looming deficit in the state's fund to pay for upgrading sewage treatment plants. And if it's not worked out by next year, it could delay or even derail cleaning up the Chesapeake Bay.
The Bay Restoration Fund, as it's known, is financed with the so-called "flush tax," the $30 annual fee the General Assembly approved in 2004 that is paid by every household and business hooked up to a sewer system.
According to the Maryland Department of the Environment, the fund has paid out more than $159 million so far for wastewater treatment plant upgrades. A dozen are finished, with 14 under construction. Another 25 plant upgrades are in design, with 16 still in planning.
The only problem is the three largest treatment plants - the Baltimore area's Back River and Patapsco, and Washington's Blue Plains - have yet to be upgraded. The bills for those three all come due around the same time, overtaxing the fund to the tune of $660 million. State officials are pondering how to close the gap, with the possibility that they may ask for a 50 percent increase in the flush tax or fee.
Construction is already under way on the Patapsco treatment plant in Fairfield, (pictured above, with plant in foreground). The 73-million-gallon a day facility serves part of Baltimore city and much of Anne Arundel, Baltimore and Howard counties. It's to be finished in 2013.
Work is slated to begin in November on the 180 million-gallon-a-day Back River plant, which treats sewage from half of Baltimore city and half of Baltimore County. It's due to wrap up in 2015.
The big megillah is the Washington area's Blue Plains treatment plant, a 370-million-gallon-a-day monster that treats the waste from the Maryland suburbs of the nation's capital, along with the District and part of Northern Virginia. Construction on it is to start in September 2011 and take more than five years.
The three combined account for nearly two-thirds of the nitrogen reductions from sewage plants and industries that Maryland officials have pledged to make as part of the overall bay cleanup plan.
But with work on all three overlapping, the bay fund won't have enough to pay the bills. Robert M. Summers, deputy secretary of the environment, told lawmakers on Tuesday that the fund will start to run in the red in 2012 and the deficit could reach $660 million by 2018. In a briefing for the House Environmental Matters Committee, Summers said officials have asked an advisory committee for recommendations on how to deal with the shortfall.
So far, five options have been put on the table. The simplest would be to increase the flush tax or fee by roughly 50 percent, from $30 a year to $45. That would cover the gap, but it may give some lawmakers heartburn.
Other options include the state shifting some of the costs of the upgrades to local governments. Right now, the state fund covers the full costs of the work. Local officials aren't likely to welcome that. A variation on that would allow the state fund to pay debt service on bonds local governments would issue to pay for the upgrades.
Lastly, the state could decide to delay or drop certain plant upgrades - but the state doesn't have much latitude here, since the federal government is drawing up a court-ordered pollution diet for Maryland and other bay states that will impose a timetable for pollution reductions.
With some difficult budget decisions to be made in the next three months, no one on the committee spoke up for boosting the flush tax - or for any of the other options, either. But then again, a decision isn't needed until next year.
(2007 Photo by Jane Thomas, IAN/UMCES)
Comments
We need more cuts in government spending.
Say no to tax increases and increased taxes.
Posted by: leon | January 20, 2010 11:47 AM
Keep a $30 flat base for the flush tax. In addition to that, create a separate flush tax schedule based on percentages. The percent addition to the flat $30 would be calculated based on the amount of water a particular taxed entity uses. The more water a residence or business uses/wastes, the higher the percentage. Might give an extra incentive to develop better water conservation.
Posted by: Laura | January 20, 2010 11:51 AM
But what is the *source* of the budget shortfall? Have expenses risen in some unanticipated fashion, or was the program never properly funded from the start, or is the program improperly managed?
As part of any remedy for the current shortfall, we need to examine how the tax dollars were/are being used. This is a necessary program, but any increase in funding should be contingent on an examination of how/why we've missed the mark so badly... When we find ourselves departing so radically from projections, it's a clear indication that something is wrong with the program structure, implementation, or management.
TW: It appears that cost estimates for the "enhanced nutrient removal" (ENR) upgrades have escalated as they actually began to construct them.
Here's a quote from last year's annual report on the fund: "Wastewater treatment plant construction costs on recently opened bids are significantly higher than
the original pre-planning level estimates. As a result the total capital cost for the ENR Upgrades is
likely to be higher than the $750 million to $1 billion range estimated at the time of legislation. The
escalating costs can be attributed to increasing energy, steel and concrete costs."
One might reasonably wonder if costs might have moderated some in the past year, now that the economy is in a funk. But it appears not. State officials also point out their estimates at the time the General Assembly approved the flush fee were "order of magnitude" projections.
For more, go here: http://www.mde.state.md.us/assets/document/BRF-AnnualStatusReport01-2009.pdf
Posted by: JohnnyOysterSeed | January 21, 2010 9:30 AM
Leon should build an outhouse and a well, so he doesn't need water and service services he doesn't think he should have to pay for. These funds are to clean up your mess and everyone else's. There's no free lunch out there.
Posted by: NB | January 21, 2010 10:05 AM
You state that " the state doesn't have much latitude here, since the federal government is drawing up a court-ordered pollution diet for Maryland and other bay states that will impose a timetable for pollution reductions'.That is correct of course, but the situation is even worse than that. The Nutrient Reduction Program ( a program established by Governor Ehrlich, by the way, fat lot of good it did him with the environmental lobby) has done more to remove nutrients from the Bay than any program in history in Maryland or elsewhere. But the EPA has already said that full implementation of the program in its current form will not achieve the new limits they intend to set for the State. This funding shortfall just makes matters worse for Maryland. I think recent news reports are instructive. Virginia is already on record opposing new stormwater management rules. Maryland's (again already deemed inadequate by the EPA) stormwater regulations have been found to be unworkable in the nearly unanimous opinion of local government across Maryland, Governor O'Malley is already backing off on any further regulation of the agricultural industry. Pennsylvania, New York, and West Virginia may only now be waking up. What does this tell us? It tells us clearly that the EPA has grossly overstepped its bounds and is about to get the ultimate slap down, probably from the White House. They will, of course, put a fig leaf on it and claim an environmental victory. How can they do otherwise when the Maryland's Conservation Communiity has already endorsed Governor O'Malley. But the truth is they will back down in the face of realities in the form of employment needs, budget constraints, and overwhelming opposition to an arcane Bay proposal.
Posted by: Jim Noonan | January 21, 2010 10:40 PM