The mysterious drainage fee, also known as "The rain tax"
What is it used for, exactly?
In 2017 Mayor Duggan pushed to unilaterally enact a new drainage fee on your Detroit water bill, but because it looks an awful lot like a tax it has been tied up in court ever since, because of challenges as to whether it was legally enacted. According to the Headlee Amendment to the Michigan Constitution, any new tax must be approved by voters. The drainage fee hit churches and junkyards especially hard; some of them formed the Detroit Alliance Against the Rain Tax, and filed the lawsuit to challenge the "fee." Meanwhile, even though its legality is currently being questioned in court, the Detroit Water & Sewerage Dept. (DWSD) has continued to charge residents for it...and residents are still paying it.
The rain tax is expected to raise $188 million for the DWSD in fiscal year 2024. In 2016 Mayor Duggan switched from using water meter sizes as the basis for drainage fee charges, and began using what he determined as impervious acreage, saying it would reflect rainfall treatment costs that each property generates. He said that he would use this revenue to address stormwater issues. Duggan also said that the drainage fee would not be increased, but it was—especially on churches and businesses that did not support his reelection in 2017. For homeowners, the fee typically can comprise around 30% of their water bill!
When Detroiters For Tax Justice recently asked what those funds collected by the drainage fee are being used for, the response we received made it hard to discern any significant stormwater-related usage of what now is likely near a billion dollars in revenue collected since the fee was enacted.
When high flooding occurred in Detroit in June of 2021, serious home damage and health threats from mold occurred. No stormwater funds were immediately expended to relieve these emergency conditions or to reimburse losses of flood victims. To this day, complete recovery from those floods has not been achieved for many homeowners. In fact, in the aftermath of the flood City officials said that if it wasn't for the freeways holding billions of gallons of stormwater, basement flooding would have been worse. But many hundreds of cars were stranded and totaled due to that freeway "storage," which was caused by failed pumps and because no new stormwater retention capacity was built. The Mayor's drainage fee program was already nearly five years old by that point.
So if the drainage fee was not used to address the biggest stormwater crisis in modern memory, then where are the funds going now? Detroiters For Tax Justice sent a Freedom of Information Act request to DWSD seeking all information on drainage fee expenditures in fiscal year 2022. They responded by saying that those funds are mixed with sewerage operations expenditures and there are no separate line items for storm water projects. So the reasons for the fee given back in 2017 are not being honored...and perhaps have never been honored. Either they were not being truthful about the fee when they enacted it, or they aren't being truthful now.
Furthermore that response doesn't even make sense, given the fact that DWSD no longer handles sewerage operations. In 2024 Mayor Duggan worked with Governor Snyder to turn Detroit's control of water and wastewater operations over to the suburban-dominated group that they organized, the Great Lakes Water Authority (GLWA). It runs the wastewater treatment plant, the major sewer collection interceptors, and the related pumping stations that transfer sewer flows. DWSD is only responsible for alley sewers and small local sewers that eventually feed into the interceptors.
DWSD will also collect $109 million for sewerage charges in 2023, which is likely to be given to GLWA to help pay for sewerage operations that they run. But DWSD and GLWA both say that no drainage fee dollars go to GLWA. So where do the drainage fees go? Detroiters For Tax Justice is continuing to pursue this mystery. What we do know is that every year at budget hearings DWSD reports to City Council that it projects to collect at least $100M from the fee, and since they have been collecting it since 2017 we estimate it likely adds up to around a billion dollars.
