The Utah Foundation research report Flowing Toward 2050: Utah’s Water Outlook recommended that Utah policymakers “re-examine the role of property tax funding for water agencies, with a goal of reducing tax support and increasing water rates,” as well as creating “more significant price gradations in block-rate water plans.” The Utah Legislature’s Revenue and Taxation Interim Committee heard testimony on just that question at its meeting on June 17, 2015.
Water district managers, including Ron Thompson of the Washington County Water Conservancy District and Gene Shawcroft of the Central Utah Water Conservancy District, pointed out that water development in Utah has been a generations-long process, with some projects underway for more than 90 years. They said property taxes provide a stable revenue base for the districts that allows them to issue bonds and plan for capital improvements over the long term.
Critics, such as Utah Rivers Council Executive Director Zach Frankel, argue funding water projects from property taxes doesn’t reflect the value of the water resource and provides little incentive for users to conserve.
Utah Foundation President Steve Kroes told the committee the market for water will respond to a “price signal” as water rates increase to more closely reflect actual usage, and that provides policymakers with a key decision-making tool.
Much of the discussion was informed by a chart prepared by Leif Elder of the Office of Legislative Research and General Counsel, showing the differences in funding for various water districts around the state. Some are entirely funded by property taxes, while others have a mix of funding from taxes and fees for service. Committee members came back to the chart several times to consider the role property tax funding has in providing the water Utah’s communities depend on.
After hearing testimony, the committee adopted a motion asking its staff to “to formulate a list of legislative options to bring back to the committee for further consideration.”