California water districts can raise taxes without voter OK
Updated 8:36 pm, Wednesday, July 23, 2014
Urban water districts in California can raise property taxes without first getting voter approval to pay for the state’s multibillion-dollar plan to build twin tunnels and export water out of the Sacramento-San Joaquin River Delta, according to the California Legislative Analyst’s Office.
The right to tax homeowners for water projects is part of obscure legislation bestowed exclusively on water districts, which historically funded dam construction and other large projects with property taxes. The Santa Clara Valley Water District, one of the largest metropolitan water agencies in Northern California, is one of several agencies that are considering taking advantage of the law when and if construction of the $25 billion tunnel project gets under way.
“The tax is a mechanism to recover the costs that are passed on to us,” said Jim Fiedler, the district’s chief operating officer, adding that any decision on property taxes would first be discussed in public hearings. “We have an obligation to pay the debt for the State Water Project.”
The recent Legislative Analyst’s Office report affirms that local water agencies can levy property taxes “for water deliveries” from the elaborate delta water distribution system known as the State Water Project. The reason, according to the report, is that such tax levies were approved by voters before the 1978 passage of California’s landmark Proposition 13, which requires a two-thirds vote before property taxes can be raised.
“State courts concluded that such costs were voter-approved debt because voters approved the construction, operation, and maintenance of the State Water Project in 1960,” the analyst’s office stated. “As a result, most water agencies that have contracts with the State Water Project levy a voter-approved debt rate.”
Many of the 29 State Water Project agencies currently use at least some property tax revenue to pay for water-delivery and construction-related costs.
Santa Clara water district officials are considering raising the property taxes of their 1.8 million customers in Silicon Valley from about $36 to $60 a year over the next decade to help pay the $228 million costs they expect to incur between now and 2024 for the delta tunnels.
The Metropolitan Water District of Southern California, whose 19 million customers in the Los Angeles area get nearly half their water from the state, currently gets 5 percent of its revenue from property taxes, but district officials said they would not be increasing taxes to pay for the tunnels.
Other local districts, including the San Francisco Public Utilities Commission, Contra Costa Water District and the East Bay Municipal Utility District are not currently involved in the delta tunnel funding process.
Gov. Jerry Brown wants to build the tunnels to transport water from Northern to Southern California. The $25 billion plan would include habitat restoration in the delta for endangered salmon, smelt and other marshland creatures.
The issue for environmentalists, antitax groups and others who oppose the tunnels is that as many as 27 public agencies in Northern, Central and Southern California that purchase water from the state could also conceivably raise taxes to pay for the tunnels without first asking voters. State water contractors deliver water to more than 26 million residents and irrigate more than 750,000 acres of agricultural lands.
“The point here is that these tax increases are the collateral for the loans,” said Tom Stokely, the water policy analyst for the California Water Impact Network, and “property owners are going to be taxed to pay for a project without their approval.”