Officials in communities across the state may have to reassess how they bill property owners for maintaining storm sewers after the Pennsylvania Supreme Court ruled last month that separate fees for such services could be viewed as taxes.
The ruling was handed down April 30 in a Chester County lawsuit involving West Chester Borough and West Chester University of Pennsylvania.
The court ruled that the borough’s stormwater fee, charged to the university and other property owners within the borough, amounted to a tax largely because there was no way to measure how much rainwater is discharged from individual properties, making a fee based on usage all but impossible to determine.
As a tax-exempt body, the university sued to have its fee eliminated.
Just over 1,000 Pennsylvania municipalities have Municipal Separate Stormwater Systems (MS4) that guide storm runoff into waterways as a way to prevent flooding. The systems are separate from sanitary sewers, which collect water flushed down drains in homes and businesses. When the systems are combined, heavy rain can cause overflows at sewage treatment plants, allowing raw sewage to reach streams and rivers.
About 87 communities, according to Spotlight PA, have imposed stormwater fees for maintenance and repairs to comply with state Department of Environmental Protection (DEP) rules requiring that rainwater be kept out of sanitary sewer systems.
Locally, Allegheny Township, Plum, Murrysville, Latrobe, Delmont and Pittsburgh are among those charging a stormwater fee.
How those fees are collected varies among communities. Some tack the charge onto residents’ water or sewage bills. Others issue a separate bill, often monthly or quarterly. For residential properties, the charge typically is a flat fee.
What the court decision means broadly for municipalities is they either have to change their charge to a tax or rewrite their code to make it fit the guidelines of a fee charge, said Charles Potter, a tax attorney and shareholder at Tucker Arensberg.
A fee likely would require measuring consumer usage, he said.
“For it to be a fee, there has to be some indication that someone is receiving some kind of specific service,” Potter said.
Robert P. Strauss, an economics and public policy professor at Carnegie Mellon University who has researched stormwater policy since the 1980s, said the decision likely will be a financial blow to municipalities that rely on the fees, especially from large, tax-exempt entities like school districts.
“The stormwater operators are going to have to find a way to find the money to pick up the lost revenue,” Strauss said.
The decision will put local public water authorities in a greater pinch because they can’t charge taxes, Strauss said. Only governments can charge taxes. Water and sewage authorities can only charge fees for services based on customer usage and operating costs.
Now, the state Legislature will need to weigh in on how the decision affects local municipalities, he said.
“To fashion a solution requires a numerical understanding of the impact on the budgets of these stormwater runoff operations,” Strauss said.
Delmont Stormwater Authority Chairman Stanley Cheyne said the borough’s solicitor is reviewing the court ruling so the municipality can decide what to do next.
“I’m anticipating this will be a topic of discussion at the June meeting,” Cheyne said.
Delmont imposed its stormwater fee last year after having to retrofit a retention pond in its Apple Hill neighborhood and build two more ponds, one by Newhouse Park and another near Lindsay Lane, Cheyne said.
Retention ponds hold water and slowly release it into waterways.
The borough’s charge for residential properties is $10 a month. Commercial properties pay on a scale based on the square footage of their buildings and parking lots.
The fees are reserved for stormwater system projects, like the current pond construction project.
Typically, DEP will inspect storm sewer systems every five years and determine what repairs and maintenance are needed.
“The upkeep requirements will depend on the nature of each individual system,” said Neil Shader, a DEP spokesperson.
That’s what happened in Allegheny Township, which was required to build several retention ponds to collect rainwater runoff so it can be released slowly into storm sewers and prevent flooding.
The bill for such projects can be steep. Allegheny Township is paying about $1.6 million to improve nine retention ponds, said supervisors Chairman Jamie Morabito.
Failure to complete the project to DEP’s standards could result in fines equal to the cost of the project, Morabito said.
“We will have this project completed by September,” he said.
For now, the township will not change how it charges for stormwater until the state issues clear guidelines for how communities should impose the fees.
“Until we have more clarity with the (township’s) engineering firm, we’re going to continue moving forward as we have been,” Morabito said.
The township imposed its $102 yearly fee on all properties in 2025 because of financial pressures tied to DEP stormwater requirements.
Murrysville officials are being more cautious, saying they likely will halt fee collection — about $7 a month for most residential properties — because of the court ruling. Their fee was implemented late last year.
They also held off approving a credit system that would offer residents a fee waiver if they mitigate their own runoff with state-approved best-management practices such as catch basins, swales, permeable pavement or rain gardens.
Murrysville Chief Administrator Michael Nestico said the state Supreme Court decision is something that will require clarification.
“While staff still recommends council approving (the credit program and appointing Keystone Collections to collect the fees), we’re very likely going to pause any collections until we get some more direction on how we can proceed legally with them,” Nestico said.
Pittsburgh, which has been in a program to separate its sewage systems since 1990, also charges stormwater fees, though only about 25% of its stormwater system has been separated from sanitary sewers. For most residential properties, the city’s fee is about $11.50 per month.
The frequency of stormwater system repairs depends on age, condition, rainfall patterns and location, said Pittsburgh Water spokesperson Julianne Pelusi.
She said stormwater fees are becoming more popular for municipalities “because stormwater infrastructure is aging, rainfall patterns are becoming more intense, and municipalities must meet state and federal water quality requirements.”
Without a stormwater fee, costs would have to be covered by a municipality’s general fund, through grants, loans or taxes. That’s what towns without stormwater fees have been doing all along.
In Tarentum, which doesn’t have a stormwater fee, progress is underway to separate the sewage and stormwater system, starting with new line installation at East Seventh Avenue and Ormond Street to bring it up to DEP standards.
The project will cost nearly $400,000, paid for largely by federal Community Development Block Grant and state Gaming Economic Development and Tourism Fund monies.