By Jeff Montgomery and Molly Murray

The News Journal

Clean Water fund%3A Property tax surcharge -- %2445 yearly for most homes. Scaled for larger properties%2C multi-family units%2C commercial and industrial land. Capped at %2425%2C000.

Gov. Jack Markell on Tuesday proposed an $800 million program to clean Delaware waterways, curb stormwater runoff and flooding, and protect drinking water, suggesting a statewide tax that would cost most homeowners $45 a year, and more borrowing to pay for the effort.

"Somebody has to do this," Markell said. "We have a fundamental responsibility, I believe, to leave the next generation cleaner water – water you can fish in, water you can swim in, not as many problems with drinking water, not as many problems with stormwater and all that flooding. ... It's just not acceptable and it's embarrassing."

The governor's plan relies on the new tax charged to property owners, which would generate $30 million annually, and a $60 million each year in new state borrowing or state-assisted loans by others. That money would be added to the current $30 million set aside for state water projects.

Markell's proposed water tax is the second new tax he's recommended in little more than a month. Last month, he called for a 10-cent increase in the state gas tax to improve roads and bridges.

House Speaker Peter C. Schwartzkopf, D-Rehoboth Beach, said he hadn't seen the details of the water plan, but with both the proposed gas tax and water fee, he predicted "it's going to be a hard push in one year."

The governor outlined his tax plan, expected to produce about $30 million annually, in a speech at the DuPont Environmental Education Center along the banks of the Christina River near Wilmington as more than 100 looked on.

The new water tax would differ for large residential properties and multi-family sites, and could rise as high as $25,000 annually for the largest commercial or industrial properties. Markell's plan would automatically increase the tax each year for inflation.

Proceeds would support up to $120 million in annual grants, loans and other aid for water-related needs for five years.

Markell's plan would address support spending for an $800 million list of "strategic investments" in stormwater and flood control projects, waterway restorations, drinking water system upgrades and toxic contamination cleanups. Some funds also would help the state's farm community step up spending for planting strategies that reduce flows of fertilizer-like nutrients into surface and groundwater.

Some taxpayer money also could help industries pay big bills for cleaning up wastewater discharges, or reducing harm from cooling water intakes.

SPECIAL REPORT: Delaware's Dirty Water

"We are not simply going to regulate our way to achieving water quality standards," Markell said. "We all contributed to the problem, and we all have a responsibility to fix it."

He sidestepped questions about resistance from those already chafing over the gas tax proposal.

"I don't really want to be a citizen of the state when our neighbors, our competitors, are making significant investments in infrastructure and we're not," Markell said in an earlier interview. "It would be fine with me if we were in a position where the gas tax had been raised over the last 20 years and we weren't 20 years behind in terms of dealing with these problems.

"I know nobody is particularly interested in paying for anything. I keep hearing from people saying, 'Oh yeah, governor, I'm with you on infrastructure investment, I just don't want there to be a burden on anybody," Markell said. "That's literally what some folks are saying. That's not the real world."

Some 94 percent of Delaware's creeks and rivers fail to meet minimum Clean Water Act standards for fish and wildlife needs, and 86 percent are unfit for swimming. Across much of the state, particularly in northern Delaware, residents are warned to avoid eating fish they might catch, or to eat only a few a year.

While many water projects are already in the works, Markell suggested that this plan would jumpstart improvements throughout the state and quicken the pace toward better water quality. One of his goals is to see some of the fish consumption advisories on waterways lifted before he leaves office.

Sen. Robert I. Marshall, D-Wilmington West, whose district takes in some of the most-polluted stretches of the Christina River, was supportive but reserved when called to the podium for remarks on Markell's plan, calling the plan "outstanding and aggressive."

"We need to take his proposal and look at it line by line under the magnifying glass to make sure all of Delaware is getting the benefit, and look at the big picture that we need to do for the many other public works projects that are demanded in this state," Marshall said. "I'll be working with you to pull together a project that we can all be proud of come July 1."

Sen. Gerald Hocker, R-Millville, said he believes state environmental officials need to first tackle one-time capital projects such as diverting Del. 1 stormwater away from the inland bays, and dredging silt from resort-area channels where boats now stir up shallow sediments.

Hocker, a businessman in coastal Sussex County, said residents in his area are visiting food banks in record numbers and many struggle to pay utility bills.

"I think the timing for a new tax is terrible right now," Hocker said. "We keep going to the taxpayers ... I don't think the state is doing their share."

Most homeowners would pay the equivalent of about $1 a week, Department of Natural Resources and Environmental Control Secretary Collin P. O'Mara said.

"This is not a problem where you can point your fingers and say, 'It's somebody else's fault,'" O'Mara said.

Markell said his proposal would create 5,000 to 6,000 jobs over the next five years in water-quality tasks that range from laborers to engineers and scientists.

The proposal includes $75 million to help industries upgrade plants or meet federal standards. O'Mara said questions had been raised about spending on private industries, but he said the investments would have to meet federal, state and local requirements and "align with the broader water quality goals across the state."

Pressure is on to help existing or future industries as well.

Environmental Protection Agency rules for cooling water intakes and factory discharges are toughening, and the federal agency is pressing Delaware in particular to catch up with updates of long-expired industrial and municipal permits.

Factories and power plants in Delaware, including the Delaware City Refinery, are particular concerns, O'Mara has noted.

At the same time, dozens of communities and homeowner associations are struggling to upgrade outdated or substandard storm drains, ponds and community septic systems. Markell's proposal would speed help to those projects through no-interest or low-interest loans or financing.

Dave Carter, conservation chairman for Delaware Audubon Society, questioned DNREC's credibility in some of its claims. Delaware leads most other states in the country in the percentage of sites operating with expired discharge permits, he said.

"For the life of me, I cannot understand how the governor or O'Mara can talk about needing more money for Clean Water construction projects to clean up our toxic waterways without having cleaned up our failing NPDES permit program," Carter said.

While the administration isn't calling this a "flush tax," it will be based on something municipal and county officials use statewide – equivalent dwelling units – for water and sewer billing.

Markell's proposed fee would track property size, so while the typical homeowner would pay $45 a year, owners of larger homes, multi-family buildings, commercial, industrial and other sites would pay more — in some cases up to $25,000 for the largest commercial and industrial sites.

Neighboring Maryland has the Chesapeake Bay Restoration Fee, dubbed a "flush tax," in which the average homeowner now pays about $60 a year. The money goes to upgrading sewage treatment plants, fixing failing septic systems and for grants to farmers to plant fields with winter cover crops that help reduce nutrient runoff.

Under the plan, state spending priorities would be worked out by the recently expanded state Water Infrastructure Advisory Council, an appointed statewide panel with both public and private members, and representatives from all three counties. The group has guided grants and loans for sewage treatment systems and other water-related needs for decades.

Contact Jeff Montgomery at (302) 463-3344 or jmontgomery@delawareonline.com and Molly Murray at (302) 463-3334 ormmurray@delawareonline.com