Proposed Drinking Water Tax Issue Heating Up with Statewide Media Coverage

  • by Timothy Quinn
  • Jun 4, 2018
  • Voices on Water

The vast majority of Californians have safe drinking water.  But some communities do not.  This is unacceptable, and it is an urgent social issue for the state.  Beginning last Friday online and published during this past weekend, The Sacramento Bee and four other affiliated newspapers throughout the state published stories that focused on the plight of 360,000 Californians without access to safe drinking water.  The stories presented this issue with the depth and seriousness it deserves as an urgent priority for our state.

Unfortunately, the stories misrepresented the diversity of ACWA’s membership and our position on funding solutions.  ACWA has 448 agricultural and urban public member agencies that deliver about 90% of the water used by households, farms, and businesses in California.  They are local governments; most with Boards of Directors elected by the public.  ACWA members have a direct relationship with their rate-paying customers.  The vast majority of our members are small and medium-sized agencies; it is simply not accurate to describe ACWA as representing “the big urban suppliers” referred to in the stories.  At present, 189 public water agencies and business associations, including many agricultural agencies throughout the state, have taken action to oppose the proposed water tax in the Brown Administration’s budget trailer bill, which is based on SB 623 (Monning).  They are not trying to “kill” the legislation as alleged in these articles.  Instead, they are trying to replace the proposed water tax with a reasonable funding mechanism so that legislation can be passed and the underlying drinking water problem in disadvantaged communities can be solved as soon as possible without an unnecessary tax on drinking water.

So, the controversy is not over whether or not there is a drinking water problem in certain communities.  Everyone involved in the legislation agrees that there is a problem that needs to be solved.  Everyone agrees that a Safe and Affordable Drinking Water Fund should be created.  The issue is what are the appropriate sources of funding, a topic largely ignored by the Bee articles.  The budget trailer bill would raise revenues through a new state tax on drinking water, something that is essential to life; a new state tax on a service that local agencies struggle to keep affordable; a new state tax to be paid by local household and business ratepayers that have no nexus whatever to the problem; a new state tax when the state has an $8.8 billion budget surplus – nearly 50% more than earlier projections.

Such a tax would set a precedent for additional new taxes on drinking water.  Two state agencies are already publicly discussing additional taxes on drinking water for various purposes.  If those taxes are approved, we would not be talking about 95 cents per household per month, but rather nearly $20 per month (and likely more) in state taxes added to local water bills.  If the Brown Administration succeeds in adding state taxes to local water bills to solve state social issues, they would crowd out the ability of local water agencies to do their job of raising funds to provide safe and reliable water supplies for their customers.  That outcome can be avoided because there are credible alternatives to a tax on water.

ACWA is not just asking that the state “explore“ alternatives as reported in the recent articles.  We are offering concrete proposals that rely on a variety of funding sources, including federal State Revolving Funds designed for this purpose, funds from general obligation bonds passed by the voters, nitrate-related fees on fertilizer sales, dairies and confined animal operations that are proposed in the budget trailer bill and SB 623, and a very modest use of the general fund to cover operation and maintenance costs.  The main objection to this alternative has been that the general fund is vulnerable to economic downturns.  We question which future Legislatures will not be able to commit $35 million in the annual budget for operation and maintenance costs if the issue is truly a priority for the state.

As another way to fund safe drinking water without a water tax, we are suggesting taking a small fraction of that $8.8 billion state budget surplus to create an irrevocable safe and affordable drinking water trust that could fund all or a portion of operation and maintenance costs into the future, including during down economic times.  Other alternatives are the use of lease revenue bonds and Cap-and-Trade funds.  (See WaterTaxFacts.org  for more information.) None of these practical, realistic and doable alternatives are mentioned in the story. Neither is it mentioned that ACWA would like nothing more than to reach an agreement on a funding alternative that ensures safe drinking water for all Californians.  The time is now for honest negotiation to develop viable funding alternatives to provide safe water for all Californians.

To learn more, visit ACWA’s No Water Tax page.

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