Capital Region Water (CRW) has filed a case in Pennsylvania Commonwealth Court seeking to require the state to pay approximately $475,000 annually in stormwater fees for runoff from state-owned properties in Harrisburg.

The utility charges property owners based on runoff from impervious surfaces, including roofs, parking lots and sidewalks. Pennsylvania has refused to pay the assessments, arguing that its tax-exempt status exempts it from the charges.

CRW estimates that impervious surfaces at the state Capitol Complex generate approximately 3.1 million gallons of stormwater runoff annually, while the state-owned Farm Show Complex generates another 2.5 million gallons.

The dispute follows an April Pennsylvania Supreme Court ruling in Borough of West Chester v. PASSHE, which classified a municipal stormwater charge as a tax, exempting the state and other tax-exempt properties from payment. CRW argues its charges are different because the utility operates under the Pennsylvania Municipal Authorities Act, which authorizes stormwater system financing and service charges.

CRW introduced its stormwater fee in 2020 through its City Beautiful H2O program to fund aging infrastructure, meet federal clean water requirements and support green infrastructure improvements.

The utility estimates that losing payments from the commonwealth and other tax-exempt properties could reduce revenue by $2.5 million annually. CRW officials warn that the shortfall could force stormwater rates for Harrisburg residents and businesses to increase by at least 50%.

The court case seeks to clarify whether the state must contribute to the stormwater infrastructure its properties use, a question that could affect other Pennsylvania utilities and municipalities.