Restricting large housing developments built with septic systems, which O’Malley said would safeguard farmland and protect the Chesapeake Bay, “may have a meaningful adverse impact on many small business residential developers, homebuilders, and associated contractors,” according to a nonpartisan analysis by the state’s Department of Legislative Services.
A separate analysis concluded a proposed increase in the “flush tax” on water usage for Chesapeake Bay restoration could also have a negative effect on business.
The analysis found that “many small businesses will pay an increase of more than 250% in bay restoration fees, which may represent a meaningful adverse impact on at least some small businesses, particularly those engaged in operations that require significant water usage.”
O’Malley is scheduled to testify before lawmakers on Tuesday to push for a trio of environmental proposals — restricting new septic systems, increasing the flush tax on water use and jump-starting an offshore wind-power industry.
The O’Malley administration has acknowledged the plan to incentivize offshore wind energy would have an impact on small businesses due to projected increases in electricity costs. But it had maintained the other two bills would have “minimal or no impact” on small business.
Monday night, several lawmakers on the Senate environment committee expressed skepticism about the governor’s proposals in advance of his testimony Tuesday.
“I think the administration doesn’t even really know what small business is,” said Sen. Roy P. Dyson, a Democrat who represents Calvert, Charles and St. Mary’s counties in southern Maryland.
Dyson said O’Malley’s effort to curb the use of septic systems “will have an adverse impact on the growth in my area, a tremendous adverse impact.”
Sen. J. B. Jennings (R-Baltimore County) said that bill would “without a doubt” affect the ability of developers to do business in his area.
Regarding the flush tax, Sen. Edward R. Reilly (R-Anne Arundel) said businesses would bear “the real burden” of any increase. “Restaurants, hospitals, multifamily units, these facilities are going to see thousands of extra dollars per year” in costs, Reilly said.
But Sen. Paul G. Pinsky (D-Prince George’s) defended the governor’s proposals, saying some negative effects on business are necessary to achieve goals such as pollution reduction and smart growth.
“Of course the builders are going to be against” restrictions on large housing developments served by septic systems, Pinsky said. “But the cost to the state and the federal government of cleaning up the bay is astronomical, and if we could reduce runoff, reduce nitrogen by restricting septics, it’s all to the benefit,” he said.
Pinsky also expressed support for O’Malley’s proposal to increase the flush tax to address a shortfall in funding for upgrades to the state’s 67 major wastewater treatment plants.
The current flush tax for businesses is determined by a sliding scale, and the fee on household water and sewer bills is a flat monthly rate of $2.50. O’Malley’s bill would change the residential rate and the business rate to a matching progressive fee structure based on water usage.
This session marks O’Malley’s second attempt to curb development sprawl by restricting septic systems. A bill with more stringent restrictions stalled in the legislature last year.
O’Malley also tried to push through a bill to spur offshore wind energy last year, but the plan was rebuffed amid concerns about the cost to utilities and ratepayers.