We wouldn’t preach to teens about the dangers of smoking, then give them five cartons of Marlboros. But that’s pretty much how water policy in Utah has worked for decades.
All across the state, rather than have water users simply pay for what they use, water districts use property taxes to keep the prices artificially low. If you live in a condo without a lawn or have pulled up your grass to save water, you still pay part of the cost for your neighbors to water their lawn through your property taxes.
According to a recent report from the Utah Rivers Council, just five of Utah’s largest water districts collected more than $130 million in property taxes in 2020. Statewide, property taxes make up a quarter of all of the money flowing to water districts.
The impact is pretty obvious. A 2015 report from the Legislative auditor general found that, because of the property tax subsidy, Utahns pay some of the lowest water rates in the United States.
The problem is that, as consumers, we base their behavior on cost. If we never see the full cost of our water use, there isn’t much incentive to cut back. It’s a basic free-market principle and the consequences are easy to see: Despite living in a desert, Utahns are consistently among the highest per capita water users in the country.
Data from the U.S. Geological Survey that showed Utah had the second-highest per capita water use nationwide in 1995, 2000, 2005 and 2015, and it was the highest in 2010. (The 2020 report is not yet available.)
“Pricing water below cost prevents normal market forces from taking effect,” the legislative auditor’s report said. " No strong pricing signal leads consumers to use the resource efficiently.”
All of that use means the water districts have to spend more to develop new water projects, meaning more debt and more property taxes. And the system really breaks down when there isn’t any more water to develop.
It wasn’t the only Utah water law that has historically been a nonsensical mess, incentivizing wasteful consumption in the second-driest state in the nation. We managed to get away with it for generations, because supply was adequate and our population was small.
Finally, after 20 years of crushing drought, withering rivers and disappearing lakes, the Utah Legislature finally realized that encouraging waste didn’t make sense.
So, for example, Utah lawmakers finally got rid of a “use-it-or-lose-it” water law that explicitly required those who own water rights to use the water or risk forfeiting it.
In part because of that change, I was hopeful that lawmakers would finally stop subsidizing water costs with property taxes and give us a cost incentive to use less.
Nearly as long as I’ve been covering the Utah Legislature, a handful of lawmakers have recognized how short-sighted the policy is. In 1998, state Sen. Mike Waddoups tried to phase out the property tax subsidy. In 2011, state Sen. John Valentine did the same. Sens. Howard Stephenson and Lincoln Fillmore have pushed for it, as well.
Each time they have failed, beaten back by the “water buffaloes” that run the local water districts and want to keep the tax pipeline flowing.
This year, state Sen. Dan McCay became the latest to take it on, but earlier this month a legislative committee decided they wanted to spend some time studying the issue.
“I couldn’t get past some of the basic assumptions and questions and concerns, so I had to roll to the study, but I’m still pushing like crazy to get it done,” he told me on Tuesday. He expects to get some funding to have researchers at Utah State University do a deep dive on the issue and “figure out the best way to align the appropriate financial incentives with the water districts’ [mission].”
Hopefully the study is sincere, but I’ve seen it too often in state government that the most effective way to kill an idea is to study it to death.
Now, the water districts claim they need property taxes because they provide a stable revenue flow they need to borrow money to build expensive dams and pipelines to deliver water to consumers.
And it is true that property taxes are more stable than, say, sales tax. When times are tough, people cut back and spend less and sales tax collections drop. But even in the worst economic depression, people still shower and wash clothes and water lawns and grow crops. It is the most stable, reliable revenue source there is.
Still, these local water districts are a powerful special interest and don’t want to see any changes. Currently, these Utah water districts employ more than 40 lobbyists, according to state disclosure records. Between 2014 and 2022, just two of those lobbyists were paid more than $6 million, according to documents the Utah Rivers Council received through an open records request.
“There is no question that water rates are the single biggest driver of wasting water,” Zach Frankel, the executive director of the Utah Rivers Council, told me. “There are tens of thousands of cities all around the world that know cheap water rates drive overconsumption. It’s not a theory; it’s basic market economics, and yet conservative legislators consistently fall down in applying basic market economics inside Utah.”
It needs to change. If we are sincere about saving our lakes in this state, our conservative legislators need to put their love of the free market to work and implement policies that encourage conservation and not waste.
Or at the very least, if they want to strike a blow against socialism, they should start with the socialist water sprinkling on their own backyards.
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