It started with a compelling need. Years of drought and water source contamination have brought some small California water systems to the brink, if not past the breaking point.
Small, disadvantaged communities, many in Central Valley farming towns, face nitrates or pesticides in their well water. The hard reality is they do not have enough money in their ratepayer base to pay for treatment, find replacement supplies, or merge with neighboring systems. But something must be done. The policy question is, who should pay for this? And how?
Historically, the state has assisted qualified small and disadvantaged communities in the form of grants and low-interest loans. Most water bonds also include funds for these purposes. We pay for this through our taxes and money comes from the state’s general fund to cover the costs. But given the number of struggling small systems and competing budgeting priorities, these programs appear to be falling short.
Earlier in this legislative session, a bill was put forth that would levy a new “water tax” on every water ratepayer in the state starting July 1, 2019. The legislation would require every water provider (including SCV Water) to bill every ratepayer for this new tax. Funds would be remitted to Sacramento and used to help solve these problems.
Local water providers have, for the most part, opposed the idea. Concerns have included the cost for the state to administer the funds, turning water providers into a state tax collection system, whether these funds would make it back to the ratepayers, or whether the tax or fee revenue might be redirected entirely by a future Legislature during the next economic downturn.
When it turned out California was running a $5 billion surplus this year (per the May budget revise), the bill was sidelined and the state instead dedicated a small part of that surplus to fund relief measures for impacted small and/or disadvantaged water systems.
But that isn’t the end of the story. On Thursday, Senate Bills 844 and 845 (Monning) were introduced. This time the “water tax” has morphed into a “voluntary remittance” requirement. Water providers (including your SCV Water) would be required to bill each customer monthly, based on your meter size.
For most people, it would be 95 cents a month. Larger meters would pay between $4 and $10 a month. That’s $12 a year for most residential customers and as much as $120 a year for businesses. In the SCV Water service area that’s $1.2 million per year. The money will go to Sacramento, where it will be used (after administrative expenses) to fund a list of potential assistance efforts for water systems in disadvantaged communities.
Why is it now proposed as “voluntary remittance”? The Legislature is having difficulty getting the two-thirds majority to pass a new tax, so it has converted it into a “voluntary” program. Voluntary sounds like you can decide to give money. But Sacramento’s version will require customers to opt out of paying rather than opting in. That means we (the water agency) will be directed by law to add that extra 95 cents a month, and you (the customer) will need to opt out of paying that part of the bill every month. There’s no provision to cover the cost of billing system reprogramming, so that will come out of our local service budget.
A reasonable argument in favor of a water tax (or voluntary remittance program) might point to fees levied on telephone, electric and gas bills to pay for assistance and other communally funded programs. It might point out the greater good that is achieved when we all pitch in and provide assistance to communities in need. And there clearly appears to be a need.
A reasonable argument against a water tax might point to the state’s historic use of general fund revenues (already funded by state taxpayers) to assist struggling local community water systems, the large state surplus, the reluctance of local water service agencies to become state tax collectors, the concern that these voluntary remittances could become mandatory taxes once the voluntary collection framework is established, and the Legislature’s ability to divert these funds to another purpose.
I should also note that many other communities in California are facing the need to clean up contamination in their local water supplies. Our community has been impacted, and SCV Water has been operating perchlorate removal facilities for several years. Thus far we have paid for this through a large legal settlement with the polluter, water rates and a few state or federal grants. We have started a second round of litigation to seek cost recovery for additional contaminants from responsible parties.
This raises another policy question. If we are directed by the state to collect voluntary remittances from our water customers, should some of or all of that money be retained to address our local water quality issues first?
You can reach key leaders involved in this proposal and express your views or seek further information from them here:
Sen. Scott Wilk: State Capitol, Room 4090, (916) 441-4021 Legislative Director: Junay Gardner (email@example.com)
Sen. Henry Stern: State Capitol, Room 3070, (916) 651-4027, Legislative Director: Shaina Brown (firstname.lastname@example.org)
Sen. Bill Monning (Bill Author): State Capitol, Room 313, (916) 651-4017, Legislative Director: Bethany Westfall (email@example.com)
Sen. Robert Hertzberg: State Capitol, Room 4038, (916) 651-4018, Legislative Director: Freddie Quintana (firstname.lastname@example.org)
Sen. Patricia Bates: State Capitol, Room 305, (916) 651-4036 Legislative Director: Heidi Wettstein (email@example.com)
Assemblyman Dante Acosta: State Capitol, Room 2002, (916) 319-2038, Legislative Director: Matthew Easley (firstname.lastname@example.org)
Assemblyman Anthony Rendon: State Capitol, Room 219, (916) 319-2063, Policy Director: Meysha Jackson (email@example.com)
Assemblyman Brian Dahle: State Capitol, Room 3104, (916) 319-2001, Policy Director: Cheri West (firstname.lastname@example.org)
Assemblyman Eduardo Garcia: State Capitol, Room 4140, (916) 319-2056, Chief of Staff: Carlos Gonzalez (email@example.com)
Governor’s Office Legislative Unit: Camille Wagner, Legislative Affairs Secretary (firstname.lastname@example.org)
Matt Stone is the general manager of SCV Water.Editor’s note: Subsequent to publication of his letter, Matt Stone requested that the following clarification be added: “Contact information provided for your local Senate and Assembly representatives is not intended to imply their position on the legislation. It is simply meant to provide readers with the means of contacting their representatives to express their own views. It should be noted that both Sen. Wilk and Assemblyman Acosta have indicated their opposition to SB 845 and were on record in opposition to earlier water tax legislation. It was not the author’s intent to imply otherwise.”