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Paying for Rain: Are Stormwater Charges a Tax or Fee? PA Supreme Court to Decide in 2026
For the last three years, the Pennsylvania Supreme Court has been grappling with whether stormwater charges imposed by local municipalities and municipal authorities throughout the Commonwealth are a tax or a fee, evaluating the still-pending case Borough of West Chester v. Pa. State System of Higher Education and West Chester University of Pa. of the State System of Higher Education, Dkt. No. 9 MAP 2023. In MGKF’s 2024 Environmental Forecast, we previously reported on this important case, soon after it was taken up on appeal from the Commonwealth Court to the Pennsylvania Supreme Court. Briefing from all parties – including several amicus curiae – is now complete, and oral argument was held before the Pennsylvania Supreme Court on September 11, 2024. A final ruling from the Pennsylvania Supreme Court is anticipated to be issued in 2026.
The foundational question the Pennsylvania Supreme Court must decide is whether stormwater charges, which some have dubbed a “rain tax,” are a fee for service provided by a municipality or municipal authority, or instead, are an unauthorized separately levied tax.
The Borough and its supporters argue stormwater charges are a “fee” tied to each property owner’s respective “use” of municipal stormwater infrastructure, generally calculated by the amount of paved/impervious surfaces on a property. The larger the surface area of pavement or structures on a property, the higher the “fee” that is charged, allegedly commensurate with the higher “use” of the stormwater infrastructure. The Borough’s calculus – a similar version of which has been adopted by dozens of other municipalities and municipal authorities throughout the Commonwealth – typically results in large institutional, commercial, and industrial properties that have significant impervious areas being charged significantly higher “fees” as they are considered more significant “users” of the municipal stormwater infrastructure than single-family properties. The political balance scale also typically favors charging higher stormwater charges to a select group of property owners in a municipality – usually local businesses and institutions – rather than raising local property taxes on all residents.
On the other side of the argument is the Pennsylvania State System of Higher Education and West Chester University, represented by the Pennsylvania Attorney General, together with aligned institutional, commercial, and industrial groups. The University and its supporters argue that the Borough’s stormwater charge is a classic municipal tax or assessment because it is assessed on all properties with no possibility for a property to opt out. Moreover, the Borough could not show a concrete, direct, or discrete benefit that a property owner receives that is specifically tied to the stormwater charge imposed. Rather, the Borough only pointed to generalized community-wide benefits – like decreased flooding – benefits that are shared equally by all property owners and residents, and that typically are costs borne by the municipal general fund generated by tax revenue. The University also argued the Borough’s stormwater charge was also inappropriately high and not commensurate with any alleged “benefit” property owners receive from using the Borough’s stormwater systems.
The outcome of the Borough of West Chester case will dictate how stormwater charges can be levied throughout the Commonwealth. If the Pennsylvania Supreme Court determines that stormwater charges are an unauthorized tax, rather than a fee for service, tax-exempt entities, like West Chester University, will not be required to pay stormwater charges. In contrast, if stormwater charges are held to be a fee for service, tax-exempt entities will be treated the same as any other property owner and must pay the fee. Even if the Pennsylvania Supreme Court finds that stormwater charges are fees rather than taxes, those stormwater fees must still be commensurate with the actual service being provided to a particular property, and tied specifically to stormwater infrastructure needs and uses, rather than generalized charges devoid from property-specific conditions. A decision in the Borough of West Chester case will have far-reaching implications for stormwater projects, maintenance, and operations throughout the Commonwealth.
