A state senator says Utah’s water districts have discouraged conservation by using property taxes to keep water rates artificially low and now he wants to put a stop to the subsidies.
“We don’t have a pricing mechanism for water and our utilization does not reflect the cost of the product,” said Sen. John Valentine, R-Orem. “It’s actually hidden in the property taxes that we all pay.”
Valentine is sponsoring SB78, which would require several water conservancy districts in urban counties to phase out their property taxes and balance their books using user fees.
That could force a major change in the way water projects are financed, Valentine acknowledges. And Rep. Mike Noel, R-Kanab, who is the director of the Kane County Water Conservancy District, said it could significantly complicate the proposed $2 billion Lake Powell Pipeline.
Currently, Valentine points out that someone who owns a condo but uses very little water helps pay for the costs for a homeowner who doesn’t think twice about letting water run down the gutter.
Zach Frankel, executive director of the Utah Rivers Council, said the subsidized water rates result in wasteful use that would be curbed if the actual cost was brought into play.
Frankel said St. George water users pay about $1.11 for every 28,000 gallons used. By comparison, users in Las Vegas pay more than $3; Denver users pay nearly $5 and Tucson, Ariz., users pay $11.70 — because they are not subsidized with property taxes.
As a result, the average Washington County residents use 325 gallons of water per day, more than twice as much as Tucson residents and 100 gallons more than Denver or Las Vegas residents.
“Utah is the only state in the country that uses property taxes to lower the rates of water,” Frankel said. “Do we care that little about water? We’re sending a signal to consumers that conservation doesn’t matter.”
The bill applies to Jordan Valley, Metropolitan of Salt Lake City and Sandy and Washington County water districts.
Bonds or debt that is backed with property tax proceeds would not be cancelled, but the property taxes could not be used to incur new debt.
Noel, whose district would not be affected, said property tax revenues are needed because water projects are expensive and have to be planned 15 to 20 years into the future. That can be difficult in a region growing as fast as Washington County.
Noel also suspects that Frankel and the Utah Rivers Council aren’t really concerned about property taxpayers at all. “His intent is the ulterior motive to kill the [Lake Powell] project,” he said.
Without property taxes to back bonds, the cost of financing the project would go up dramatically.
“This is a massive project. It’s going to cost a lot of money,” Noel said. “There’s been an effort from the get-go from the Zach Frankels of the world … they haven’t wanted this project and they do not want any more growth on the Colorado Plateau.”
Valentine’s bill was assigned to the Senate Revenue and Tax Committee and could receive a hearing soon.