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Utah residents use the most water of any Western state. They also pay some of the lowest water rates.

Utahns fund water infrastructure through property taxes, which critics say disincentives conservation.

(Francisco Kjolseth | The Salt Lake Tribune) Sprinklers run at Reservoir Park in the middle of the afternoon heat during peak evaporations times on Monday afternoon, July 19, 2021, near the University of Utah campus.

When a homeowner in St. George turns on their sprinklers in mid-summer, the water that greens their lawns has already traveled from mountain springs and wells through an 850-mile pipeline network.

The 50 million gallons of water used in the southwestern Utah city on a peak summer day has already been stored in one of 22 tanks and propelled by one or more of 16 booster pump stations. It has been treated and distributed to homes through the city’s water mains.

The utility bills paid by the homeowner for all of that infrastructure in one of the driest parts of the country is modest, however. The water department charges less than $2 for every 1,000 gallons of water city residents use to irrigate their yards, even if a household uses tens of thousands of gallons in a month.

In Moab, the rates are lower, with water users paying between $1.13 and $1.88 per 1,000 gallons of water per month in mid-summer, even if a single homeowner uses more than 60,000 gallons.

Utah as a whole, 88% of which is currently enduring exceptional drought conditions, has the highest per capita municipal water use in the United States. Zach Frankel of the Utah Rivers Council thinks that’s because of the low water rates Utahns pay.

“Utah is the second most arid state in the country,” he said, “and we have the cheapest water in the U.S. It doesn’t make a lot of sense.”

The low rates that water users enjoy in Utah, including on the Wasatch Front, are something of an anomaly in the arid West. In Phoenix, for example, water users pay a small monthly connection fee and then get their first 7,000 gallons of water at no charge, which is more water than the typical home uses for indoor needs like cooking, cleaning and showering.

But if residents use more than 7,000 gallons — to, say, water a large, green lawn — then rates shoot up. Phoenix homeowners who use more than 10,000 gallons in a month pay over $12 per 1,000 gallons, or ten times that of a Moab resident. Even rain-soaked Seattle, Wash., has water rates that are nearly three times higher than many Utah communities.

The disparate rates likely influence the landscaping decisions that are made by homeowners. In Phoenix, the average resident uses 111 gallons per day, according to the most recent analysis from the U.S. Geological Survey. In Utah’s Washington County, where St. George is located, the average resident uses a whopping 306 gallons per day.

“If you drive 90 minutes,” Frankel said, “away from Washington County to Las Vegas — where you have the same hydro-geography, the same climate, the same water precipitation patterns out of the sky — the water use is almost a third of the water use in Washington County.”

Utahns pays lower water rates, higher property taxes

But just looking at utility bills alone to determine the cost being paid by Utah water users is misleading. The vast network of reservoirs, pipelines, canals, treatment facilities and municipal water lines is just as expensive to build and maintain in Utah as it is in neighboring states.

Utahns pay low water rates — “artificially low,” according to Frankel — because most Utah water districts are heavily subsidized by property taxes.

When you pay taxes on a home, business valuation or even an automobile in Utah, chances are some of that money is going to fund water infrastructure owned by municipal providers or wholesalers that sell water to cities. A 2019 report from the Utah Foundation concluded that 90% of Utahns live in a jurisdiction that collects property taxes for water.

The Washington County Water District, for instance, a water wholesaler and retailer that provides water to St. George, collected two-thirds of its revenue from property taxes and impact fees, according to a newsletter it put out in 2015. Only 22% of its revenue came from utility bills. Water wholesalers that are funded through property taxes often store, transport and treat water before selling it to municipalities at a reduced rate, which enables local water departments to charge less on utility bills.

The Utah Rivers Council conducted a survey of water districts around the western U.S., and it found Utah is an exception in this regard. Most water districts surveyed levy no property taxes and those that do often use bonds which are voted on by the taxpayers and expire when the debt is paid off. The property taxes that fund the vast majority of Utah water districts, by contrast, are permanent and not subject to voter approval.

(Rick Egan | The Salt Lake Tribune) Lone Rock at Lake Powell, on Sunday, September 6, 2020 and Tuesday, Aug. 3, 2021.

‘Inherently unfair’

In addition to doing little to incentivize conservation, using property taxes to subsidize water delivery creates an “inherently unfair” situation, according to Robin Rothfeder, an assistant professor of natural resource policy at Colorado State University.

As a doctoral candidate at the University of Utah, Rothfeder studied water usage and socioeconomic status of Salt Lake City area households in 2014. He and his colleagues found that in winter when little water is used for landscaping, zip codes along the Wasatch Front used similar amounts of water regardless of average income levels. During summers, however, a significant gap emerged. Homeowners in wealthier neighborhoods used up to five times more water than they did in poorer neighborhoods.

“The richest houses are using way more,” Rothfeder said, while “poorer households pay a higher proportion of their total summertime water costs through property taxes, compared to wealthier folks.”

If Utah water districts were to eliminate property tax subsidies and raise utility bills for the biggest water users by implementing an aggressively tiered rate structure like those used in other Western cities, lower income families would benefit the most, Rothfeder said.

Additionally, some of the biggest water users in Utah — churches, schools, universities, municipal golf courses, which are largely exempt from paying property taxes — would have to start paying more.

Conservative groups back reform

The idea has backing from environmentalists and politically conservative groups that support lower taxes.

The Utah Taxpayers Association has argued that eliminating the subsidies would help Utah better respond to drought conditions. “The full cost of water usage should be contained in the prices consumers pay,” the association argued in a July blog post, “to ensure that consumers are motivated to conserve water in a desert state.”

The libertarian-leaning Libertas Institute made a similar point while backing legislation supported by the Utah Rivers Council in 2017 that would have reduced the amount of tax revenue that water districts can collect.

“Instead of seeing the real costs on a water bill,” the think tank wrote, “the real costs are hidden in property taxes. Consumers have little incentive to monitor their own usage because on its face, water seems extremely inexpensive.” The bill failed in committee before seeing a vote.

Utah’s powerful water lobby has argued that reducing water districts’ ability to collect taxes would limit flexibility in adapting to changing needs and could affect the state’s high bond ratings. Water managers have also opposed legislation that would restructure the current system, citing substantial disruptions to current rates.

In a summary of water district reports compiled by Utah Foundation, eliminating or reducing property taxes could remove all water operating costs for owners of undeveloped land while other users could see rates more than double, a sudden spike in costs that could be difficult for businesses and institutions to absorb.

But Frankel hopes the issue will gain more attention as Lake Powell falls past its lowest level on record and as Utah’s population continues to grow rapidly. He also thinks reforming the system makes sense for the pocketbooks of Utahns. Conservation not only keeps more water in lakes and streams, Frankel said, but it reduces costs.

“The whole point of lowering water use is to save taxpayer money,” he said. “When you increase water use, you increase delivery costs; you increase the amount of treatment you have to do; ... you’re increasing your operation and maintenance costs as a water supplier. Reducing water use is the key to avoiding unnecessary government spending by water districts.”

Zak Podmore is a Report for America corps member for The Salt Lake Tribune. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.

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