This month's Ask DLS features frequently asked questions concerning the authority of municipal boards and officials to set fees and charges for any permits, licenses, or certificates they issue and any services they provide and, if those fees and charges are currently established by state statute, to set them above the statutory level. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
What gives cities and towns the power to impose fees or charges for municipal services?
In general, cities and towns have broad authority under their home rule powers to impose fees not otherwise inconsistent with state law. See Silva v. Attleboro, 354 Mass. 165 (2009); Emerson College v. Boston, 391 Mass. 415 (1984). However, those fees must meet the three-prong test established under Emerson College to determine whether it is an allowable fee or an unauthorized tax: (1) Is the charge for a particularized service?; (2) Is the charge designed to compensate the government for its costs in providing the service and not to raise revenue generally?; and (3) Is receipt of the service and payment of the charge voluntary?
Are there any limitations on the amount of fees or charges?
Under the Emerson analysis, statutory schedules of fees and charges, such as the charges for municipal lien certificates under G.L. c. 60, § 23 are presumptively reasonable. Charges higher than those set out in a statute, or charges for which there is no statutory schedule, are generally reasonable if they reflect the full cost of providing the service, such as issuing the permit or license. Conversely, charges are generally unreasonable if they regularly produce revenues substantially in excess of the full cost of providing the services. Excessive charges for a particular fee may be considered a tax. This distinction is of critical importance because, pursuant to Article 89 Section 7 of the Articles of Amendment of the Massachusetts Constitution, a city or town does not possess the authority to assess or collect a tax unless the power to do so has been particularly granted by the Legislature.
The full cost of providing certain services or issuing licenses and permits may well include more than just amounts directly appropriated for the department that does the work involved. For more information on costing services, see the Division of Local Services workbook, Costing Municipal Services: Workbook and Case Study.
Who is responsible for setting fees and charges in the municipality?
In the absence of a statute or charter provision, the power to set fees or charges would ordinarily lie with the town's legislative body, i.e. Town Meeting or City Council.
Can Town Meeting or the City Council delegate their fee or charge setting authority?
Yes. If the town accepts or has accepted G.L. c. 40, § 22F, the power of the legislative body to set charges for "any services rendered or work performed" is delegated to the board or officer heading the relevant department. It should be noted that G.L. c. 40, § 22F may be utilized in addition to the local procedures for the establishment of fees and charges by bylaws and ordinances. Under this provision, municipal boards and officers may establish reasonable fees and charges for any permits, licenses, or certificates they issue or for any work or services they perform. Where a service is provided by the department generally, rather than by a designated officer, the fee will be established by the department head. If the board or officer is appointed by an elected board, the fees are subject to review and approval by the elected board.
If no permit or license is being issued, charges may be imposed upon a person under G.L. c. 40, § 22F only to the extent that work is being done or services are being provided for the benefit of or at the request of that person. Where a charge, such as a collector’s demand fee, is not imposed for the benefit of or at the request of the person who must pay, the officer or board imposing the charge has no power under G.L. c. 40, § 22F to vary the fee schedule established by statute, local bylaw, or ordinance.
How can municipalities adopt G.L. c. 40, § 22F?
Cities and towns wishing to take advantage of G.L. c. 40, § 22F must vote to accept the statute. Acceptance is by vote of the community’s legislative body, subject to charter. G.L. c. 4, § 4.
Once adopted, existing schedules of fees and charges, whether set by statute or local bylaw or ordinance, will remain in effect until new fees and charges are adopted.
Does G.L. c. 40, § 22F contain exceptions where certain fees and charges cannot be set under the statute?
Yes, G.L. c. 40, § 22F provides that certain fees and charges cannot be set in accordance with the statute, as follows:
- Liquor permits and license fees, pursuant to G.L. c. 138;
- Fees not paid over entirely to the city or town. These fees would include those retained by the officer who receives them, where allowed (for example, certain clerk’s fees) and those that are partly or wholly paid over to the Commonwealth (for example, wetlands protection fees) or to another governmental body, such as a county (for example, dog license fees);
- Sewer and betterment assessments, under G.L. c. 80 and G.L. c. 83;
- Firearms permit fees, under G.L. c. 140, §§ 121 – 131N;
- Fees for fire department alarm inspections, per G.L. c. 148, § 10A;
- Certificates, services or work required by G.L. chapters 50 to 56, pertaining to elections; and
- Fees and charges pursuant to G.L. c. 66, the State Public Records Law.
Although special assessments for water supply purposes under G.L. c. 40, §§ 42G-42I are not expressly excluded from the scope of G.L. c. 40, § 22F, such assessments are considered taxes, rather than fees. They should, therefore, be imposed by bylaw, ordinance, or vote, in accordance with G.L. c. 40, § 42G.
Additionally, G.L. c. 60, § 15 was amended concerning demand fees. The statute now requires the amount of the demand fee to be set locally. The demand fee may not exceed $30 and will have to be voted on by the legislative body unless statute or charter allows the collector or other officer to set the fee. The collector cannot set the demand fee under G.L. c. 40, § 22F if the community has accepted that local option statute since G.L. c. 40, § 22F applies to regulatory and user fees, not collection charges of this nature.
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Editor: Dan Bertrand
Editorial Board: Marcia Bohinc, Linda Bradley, Sean Cronin, Emily Izzo and Tony Rassias
| Date published: | April 4, 2024 |
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