May a municipality lawfully require nonresidents to pay higher fees than residents?
It depends. Generally, the answer is yes as long as the different fee is reasonably justified. However, there are some exceptions. Our federal and state constitutions demand equality and uniformity in the operation of ordinances. The law also requires that an ordinance be reasonable. Together, these requirements prohibit any unreasonable discrimination against nonresidents.
Accordingly, valid government discrimination based on residency depends on two factors. First, the differential treatment must be rational. Second, the discrimination must advance a legitimate governmental interest. Thus, a municipality may impose higher fees on nonresidents if such action reasonably advances a legitimate municipal government interest such as equalizing the burdens on residents and nonresidents for the cost of providing a governmental service. LCM Enterprises, Inc. v. Town of Dartmouth, 14 F.3d 675 (1st Cir. 1994).
In some instances, differential fees are specifically authorized. One example is Wis. Adm. Code NR 1.91(11)(g) which specifically authorizes local governments which maintain and operate public boating access sites to charge differential fees on the basis of residency within the unit of government maintaining or operating the access. The code also sets maximum fees for a nonresident.