Once again, a high-court ruling on whether something is a tax, but this time in Massachusetts

The Supreme Judicial Court ruled today Saugus could charge a developer a special fee to connect to its sewer system.

At issue was whether the required payment was a fee, which towns can charge, or a tax, which they cannot, at least not without permission from the legislature.

A lower-court judge ruled the payment was a tax because the money went to help the town fix its overall sewer system, under a state order requiring the town to do something about the raw sewage it was pumping into Rumney Marsh. Because the payment helped the entire town and was not "particularized" to the developer, it was an illegal tax, the judge ruled.

But the state's highest court sided with the town, which argued that the payment was "particularized" to the developer, since the developer had a choice: It could make the payment or it could wait several years until the town fixed the sewer system to the state's satisfaction. Noting the state order - and the financial penalties the state could impose for not complying:

Here, by paying the charge [to take measures to reduce "inflow and infiltration" from leaky old pipes], the developers gained immediate access to the sewer system for their new connections, at a time when the town was required to reduce I/I under the [state order]. We do not agree with the judge that the main purpose of the new connection policy was to reduce I/I for the entire town. As discussed, the new connection policy was established pursuant to the part of the [order] that specifically addressed the sewer bank, which was the mechanism that allowed new flow to enter the sewer system. The value of the immediate access is related to the sewer bank, without which a moratorium on new connections would have been imposed because, as a witness from the department testified, the new connections would exacerbate the I/I problem. Furthermore, access to the sewer system for new connections was not a benefit shared by anyone other than those who paid the I/I charge.



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