LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY, No. 2694

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: MAY 3, 2018

 

 

SUMMARY

 

Synopsis:

Authorizes municipalities, counties, and certain authorities to establish stormwater utilities.

Type of Impact:

Local government and State expenditure increase offset by a revenue increase through user fees.

Agencies Affected:

Department of Environmental Protection, counties, municipalities, and certain local authorities.

 

Office of Legislative Services Estimate

Fiscal Impact

 

 

 

Annual State Expenditure Increase

Indeterminate

 

Annual State Revenue Increase

Indeterminate

 

Annual Local Expenditure Increase

Indeterminate

 

Annual Local Revenue Increase

Indeterminate

 

 

 

·         The Office of Legislative Services (OLS) estimates that the bill will have several indeterminate annual fiscal impacts as the cost to establish and operate stormwater utilities will be incurred by certain municipalities, counties, and authorities, with these entities serving as a conduit for cost reimbursements through the imposition of stormwater utility user fees.

·         The bill will increase the annual expenditures of certain municipalities, counties, and certain authorities by an indeterminate amount.  The OLS notes that the increase in expenditures will be offset by the annual revenue increase from the imposition of stormwater utility user fees.  In many cases, operational, maintenance, and capital costs can be almost fully recovered through the imposition of these user fees, with a small portion funded through bonds and other sources.

·         The Department of Environmental Protection (DEP) will experience an indeterminate annual revenue and expenditure increase equal to the five percent of the annual fees collected by stormwater utilities as stormwater utility charges that the bill dedicates to the DEP to pay for its various administrative and related costs.

·         The OLS notes that the bill does not specify who the user fees would apply to.

 

 

BILL DESCRIPTION

 

      This bill would authorize municipalities, counties, and certain local authorities to create and operate stormwater utilities.  The bill would permit municipalities and counties to finance the creation, operation, and maintenance of stormwater utilities through the imposition of user fees and the issuance of bonds. 

      The bill would also require the DEP to create a stormwater utility guidance manual to provide guidance to municipalities, counties, and authorities seeking to establish stormwater utilities.  The guidance manual would provide local units with rate structure guidance, including the means and method of computing rates for stormwater utility charges.  These charges would be directly related to the specific costs of the stormwater utility.  Under the bill, the DEP would receive five percent of the annual fees collected by stormwater utilities as stormwater utility charges to fund program planning, implementation, and coordination activities related to stormwater utilities. 

      Finally, the bill would authorize municipalities, counties, and authorities to contract with private firms for the operation or improvement of stormwater utilities. 

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS notes that this bill permits, but does not require, municipalities, counties, and certain authorities to establish and operate stormwater utilities.  The bill would also permit municipalities and counties to finance the creation, operation, and maintenance of stormwater utilities through the imposition of user fees and the issuance of bonds.  The OLS estimates that the bill will have several indeterminate annual fiscal impacts as the cost to establish and operate stormwater utilities will be incurred by municipalities, counties, and certain authorities, with the municipalities, counties, and authorities serving as a conduit for cost reimbursements through the imposition of stormwater utility user fees.  The OLS cannot quantify these fiscal impacts because of the lack of information on each individual stormwater utility’s cost to operate, maintain, and invest in capital improvements.

      The bill will increase the annual expenditures of municipalities, counties, and authorities that choose to establish and operate stormwater utilities by an indeterminate amount.  The cost of establishing and operating stormwater utilities include operation, maintenance, and capital improvement costs.  Operation and maintenance costs for a stormwater utility can vary widely, depending on the size of the utility.  In addition, the prioritization of capital projects depends on the outcomes and prioritization of needs that come from a stormwater system inventory, which would be specific for each stormwater utility.  Further, these projects can vary greatly in cost.  Some capital projects may include: installation of Baysaver devices, installation of additional curb, gutter, or swale conveyances, and implementing green infrastructure opportunities such as slowing or eliminating erosion at outfalls.

      The OLS notes that the bill will also increase the annual revenue of municipalities, counties, and authorities that choose to establish and operate stormwater utilities by an indeterminate amount.  In many cases, operational, maintenance, and capital costs could be almost fully recovered through the imposition of user fees, with a small portion funded through bonds and other sources.  To come to this conclusion, the OLS notes that according to the 2016 Stormwater Utility Survey provided by Black & Veatch Management Consulting, LLC, the city of Bellevue in the state of Washington established stormwater utility user fees and recovered 93 percent of its cost for its stormwater utilities through such fees, and the remaining costs from miscellaneous stormwater fees.

      In addition, the bill will result in an indeterminate increase in annual DEP administrative expenditures from implementing and administering the provisions of the bill.  For example, the bill’s provision that requires the DEP to create a stormwater utility guidance manual to provide guidance to municipalities, counties, and authorities seeking to establish stormwater utilities may result in the DEP incurring some marginal administrative costs each year.  The OLS notes that, under the bill, the DEP will receive five percent of the annual fees collected by stormwater utilities as stormwater utility charges to fund DEP’s program planning, implementation, and coordination activities related to stormwater utilities.  Consequently, the DEP will experience an indeterminate annual revenue and expenditure increase equal to the five percent of the annual fees collected by stormwater utilities as stormwater utility charges because of the bill.

      The OLS also notes that the bill does not specify who the user fees would apply to.

 

 

Section:

Environment, Agriculture, Energy and Natural Resources

Analyst:

Neha Mehta Patel

Associate Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).