Drinking Water Tax In The Works
by Jim Shields, September 6, 2017
There’s a bill in the state Senate that if approved would impose for the first time in California a tax on public drinking water for both homes and businesses.
SB 623, sponsored by Sen. Bill Monning, D-Monterey, would generate $2 billion over 15 years allegedly for a Safe and Affordable Drinking Water Fund, which would provide emergency water and longer-term system fixes for hundreds of communities whose tap water doesn’t meet safe drinking-water standards.
The proposal would generate roughly $110 million per year through a 95-cent monthly fee on home water bills as well as taxes on businesses of up to $10 per month. Another $30 million would come from higher fees on agricultural and dairy businesses, industries whose chemicals contribute to the problem of contaminated groundwater.
The bill is backed by the agriculture and dairy interests, and environmentalist groups, an odd coalition that very seldom see to eye-to-eye on anything. Water districts are uniformly opposed to the bill, because taxing water users creates a bad precedent by taxing water produced by local government water districts for ratepayers and taxpayers who already, in effect, are being taxed for that very same water.
Here’s the way the public water system works when it comes to taxes.
Under 1996’s landmark initiative, Proposition 218, The Taxpayers Right To Vote Act, water and sewer rates, fees, service charges, etc., are all subject to voter approval. Prior to Prop 218, water and sewer boards, community service district boards, and city councils could, on their own action, increase rates, fees, and charges without going to the voters. Since its implementation 21 years ago, Prop 218 requires local governments that provide water and sewer services to place all such charges before the voters. In the pre-Prop 218 era, local governments and their ratepayers would squabble, fight and litigate over whether a rate increase or a newly established “service charge” was a tax or not. Proposition 218 settled that issue. They are taxes and the voters have the right to decide if they go into effect.
Proposition 218 is now an accepted and orderly way for taxpayers to make the final decision.
SB 623 is literally the camel’s nose under the tent. A 95 cent monthly tax on public sector ratepayers may not seem like a sum of money to brawl over, but it is because this is just the opening salvo. We all know that once the tax is established it’s not going to remain at 95 cents.
This proposed law would require water districts to collect taxes for the state not approved by our customers and ratepayers. It would create another unfounded mandate where the state requires local governments to perform a service unrelated to their services but does not pay them for it. Simply stated, water districts are not private sector corporations that sell water for profit. By law, local government water districts can only charge customers the amount it actually costs them to produce the water. It’s been public policy forever not to tax not-for-profit, local government water utilities.
So why are Sacramento politicians, agriculture and dairy interests, and environmentalist groups supporting this bill?
The answer lies with at least two serous problems with contamination to the state’s groundwater mainly in the Central Valley.
I recently wrote about the contaminant 1, 2, 3-TCP. It’s a man-made chemical, used historically in industrial cleaning solvents and some soil fumigant pesticides. It’s also a recognized carcinogen that may cause cancer after long-term exposure. It has been found in groundwater sources, primarily in the Central Valley. Pursuant to a new regulation, it will require that more than 4,000 public water systems statewide to begin quarterly sampling for 1,2,3-TCP in their drinking water sources in January 2018. The chemical is currently found at dangerous levels in the drinking water served by 94 different California public water systems, mostly in the farming communities of the Central Valley. Those numbers don’t take into account the nearly 2 million Californians, mostly in rural areas, who get their water from private wells. Experts say many of those wells are also assuredly plagued by 1,2,3-TCP.
Although the chemical was removed from pesticides marketed by Shell and Dow Chemical in the 1980s, its use was so prevalent that it seeped into groundwater where it remains today in levels state scientists say would increase cancer risks after a lifetime of exposure.
Litigation brought by affected water districts against Shell and Dow Chemical for the contamination is paying off in the courts, with the two companies being ordered to fund the clean-up.
Likewise, another source of polluted groundwater was recently reported on in the water policy journal Water Deeply:
“A by-product of the nitrogen fertilizer that farmers put on crops, nitrates in groundwater have increased since the rise of industrial agriculture in the 1950s. Growers apply more fertilizer than the crops can absorb, and the excess nitrates are then washed into surface or groundwater when the crops are irrigated. In California, the most heavily affected areas are the Tulare Lake Basin in the San Joaquin Valley, where Porterville lies, and the Salinas Valley on the Central Coast, 100 miles south of San Francisco. Although nitrate pollution can also come from animal waste and ineffective sewage treatment, in these areas 96 percent is from crop agriculture, according to a study conducted by the University of California, Davis for the State Water Resources Control Board.
“It’s difficult to know exactly how many people are exposed to nitrate-laced drinking water across the state. The U.C. Davis study estimated that up to 250,000 people using 10,000 private or small local system wells are at high risk of excessive exposure to nitrates in the San Joaquin and Salinas valleys. And recent state data identifies about 60 public water systems chronically out of compliance with safe nitrate levels.
“The biggest known health risk to consuming nitrates is blue-baby syndrome, or methemoglobinemia. When babies consume nitrates, bacteria in their stomachs convert it to a more toxic form, nitrites, which reduces the body’s ability to deliver oxygen. Symptoms include difficulty breathing and a bluish color around the eyes and mouth. Without medical attention, the condition can induce coma and lead to death. Pregnant women are also at risk. Some studies have shown links to birth defects and certain cancers, but the evidence is not as clear.
“So what’s California doing about it?
The state started to get serious about cleaning up nitrates a decade ago. It is now working with growers to stop new pollution and is considering how it might clean up old contamination. But it’s costly to clean an entire aquifer, and even extraordinary efforts would take several decades to pay off.”
So these twin contamination problems are most likely the reason that unlikely bedfellows such as Big Ag, chemical companies, and enviros are pushing for a new tax source to solve the state’s pressing groundwater contamination. Of course, their motives are dissimilar and divergent.
Big Ag and the chemical manufacturers are looking to reduce their liability any way they can. The enviros probably don’t care where the money comes from, they want to remedy the contamination.
The problem is they are tapping the wrong source.
Customers of water districts have nothing to do with these issues. Besides and more importantly, there are existing state funds and programs that already provide tax dollars for communities that have problems with contaminated groundwater. The state should be using the money in those long established funds and programs, not creating an entirely new tax that places an unfair burden on water district customers and ratepayers.
If you agree that this proposed law is a bad idea, contact Assemblyman Jim Wood and State Senator Matt McGuire to let them know that.
This proposed law is an idea whose time has definitely not come.
(Jim Shields is the Mendocino County Observer’s editor and publisher, and is also the district manager of the Laytonville County Water District.)