O'Malley 'flush fee' increase may fall short

With the Chesapeake Bay cleanup at a critical juncture, Gov. Martin O'Malley is calling on Marylanders to double down on their contribution to the effort, proposing to raise the "flush fee" every household pays from $2.50 to $5 a month, on average.

Without the increase, administration officials warn, they face a $385 million shortfall starting this year in the funds needed to upgrade pollution controls at the state's biggest sewage treatment plants — most notably Baltimore's century-old Back River facility, the largest in Maryland.

But even if the General Assembly approves effectively doubling the fee, an advisory commission has warned that the effort still could wind up $90 million short because of state debt limitations that have curtailed how much officials can borrow against the expected revenue.

With Republicans criticizing any increase in the fee, administration officials say they're not seeking a larger one — despite recommendations by a task force and environmental activists to triple or even quadruple it to pay for a broader array of bay cleanup projects.

"There are a number of different ways we can deal with this," Environment Secretary Robert M. Summers said. "We should still be able to complete all the upgrades by 2017."

Any delay in the sewage projects could jeopardize the state's obligations to comply with the federal government's "pollution diet" for restoring the Chesapeake. Under the multistate plan by the Environmental Protection Agency, Maryland and other bay watershed states must put most of the needed pollution reductions in place by 2017, with the rest due by 2025.

Households on public water and sewer pay $2.50 a month on their utility bills toward sewage plant upgrades, with businesses paying more, based on their water usage. O'Malley has proposed changing the way the fee is levied, so that what households pay is based on how much water they use and send to sewage plants to be treated. The precise amount would be set so that revenues would be double what is collected at the current rate.

Homes on septic systems pay a fee of $30 a year on their property taxes, with those funds earmarked to help replace failing systems and to pay farmers to plant pollution-absorbing "cover' crops on their fields in winter. That annual fee would be doubled under the governor's proposal.

Maryland is midway through overhauling 67 of its largest sewage plants, an effort that is the centerpiece of the state's plan for cleaning up its part of the bay. Each upgrade enhances the facility's ability to remove the nitrogen in the wastewater it treats. Nitrogen is the greater of two nutrients in human and animal waste that are blamed for causing massive summertime "dead zones" in the bay, where fish and crabs can't get enough oxygen in the water.

Upgrades have been completed at 22 of the largest plants so far, while construction is under way at 18 more. The rest are in various stages of planning, design or discussion.

Construction is scheduled to start in earnest later this year at the Back River plant, which treats the accumulated flushes of about 1.3 million city and Baltimore County residents. The plant is the largest single source of nitrogen in Maryland, discharging an average of 145 million gallons of wastewater daily. Only the District of Columbia's Blue Plains treatment plant is a larger contributor to the bay's water woes.

Built in 1907, the sprawling Back River facility off Eastern Boulevard has been improved and expanded over the years, and removes about 68 percent of the nitrogen in the sewage it treats. Adding more tanks and equipment to remove nitrogen, at a projected cost of more than $400 million, should enable the plant to remove nearly 90 percent of the nitrogen in its discharge, according to city public works officials.

When the work is done, now expected in 2016, that single project should achieve about one-sixth of all the nitrogen reduction needed throughout Maryland to restore the Chesapeake, state officials say.

In 2004, when lawmakers first approved the "flush fee" to upgrade the state's biggest sewage plants, officials estimated it would take about $740 million in all. But the nitrogen-removal technology was new at the time, and overhauls have wound up costing more than projected, officials say. They now figure the total tab will be nearly $1.4 billion.

Administration officials say the shortfall is unrelated to the governor's "raiding" of the fund the past few years to help balance the state budget, because all the cash that was diverted was replenished with proceeds from bond sales.

A committee set up to advise the state on the effort began warning in 2008 that the Bay Restoration Fund, as the fee is formally called, would run short of money about now, as the largest and costliest projects come up.

In its most recent report, submitted this month, the advisory panel said the $2.50 monthly fee generates about $55 million a year, and under current debt limits the state can only borrow enough to come up with $1 billion — or nearly $400 million short.

Until recently, the advisory panel had projected that doubling the fee ought to more than cover the shortfall. But officials have had to trim projections of how much they could borrow because the state's bumping up against its debt limitations.

Summers said administration officials are looking to see if there's a way to shift bonding capacity around among other state programs and increase the amount of money that could be borrowed against the "flush fee" revenues.

Another option, he said, might be to get the plant's operators — local governments — to pick up part of the upgrade costs, with a promise to repay them later out of flush-fee revenues for any bonds they had to issue. That also would require legislative approval.

As a further complication, O'Malley administration officials have also pledged to upgrade smaller sewage plants to meet the state's pollution-reduction quota under the federally directed bay cleanup effort. .

A task force set up by O'Malley to look at bay funding needs, as well as potential limitations on septic systems, recommended gradually tripling the flush fee, raising it to $5 a month at first and then to $7.50 by 2015. The panel proposed using the extra revenue to help local governments pay for retrofitting storm drains and other unfunded projects to reduce polluted rainfall washing off city and suburban streets and buildings.

Del. Maggie McIntosh, chairwoman of the House Environmental Matters Committee and co-chair of the task force, said she has not completely given up on tripling the fee. She said she's concerned about how local governments are going to raise all the funds needed to reduce their polluted storm runoff.

Environmental activists, meanwhile, have urged the state to quadruple the fee to $10 a month, arguing that even $7.50 a month won't raise enough for local governments to afford all the storm-water pollution control efforts that are being required of them under the bay cleanup plan.

"We don't think it's enough to address all the water issues out there," Alison Prost, Maryland director of the Chesapeake Bay Foundation, said of the administration's proposal to double the fee.

A leading Republican lawmaker, meanwhile, is arguing against any increase. Del. Anthony J. O'Donnell of St. Mary's County, the House GOP leader, said that with the economy still lagging, "now is not the time to be raising taxes and fees." He contended that the collective bite of the various tax and fee increases proposed by O'Malley would be "crushing when people are struggling to make ends meet."

"We just need to take a deep breath," O'Donnell said. "The first priority is to get our economy healthy again." Only then, he added, "we can deal with some of these other important issues."


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