A Utah lawmaker has proposed changing the way property taxes are calculated and charged, so as to incentivize water conservation. This policy has potential to improve water conservation in Utah, especially if property tax directed toward water is tied to consumption. The reason is simple: The more you pay for water, the more you will conserve it.
Property taxes in Utah help pay for many things, including water that is provided by local municipalities or other providers. Many entities do not pay property taxes, such as churches, government entities, non-profit organizations, and schools. Last week, Utah State Senator Dan McCay, R-Riverton, announced plans to sponsor a bill that would charge these entities the portion of property tax that funds water. While the text of the bill has not been released, the amount charged could be connected to the amount of water being used.
As the American West desperately looks for ways to conserve water, users continue to pay very little for this liquid gold. Everyone, regardless of tax status, pays a regular water bill that funds water infrastructure and use. However, additional funding comes from property taxes. For users that avoid property taxes, this avoidance effectively serves as a water subsidy.
While the proposed change would create a new tax, in practice it eliminates a subsidy for water granted to certain tax-exempt institutions. Requiring all users to pay for a commodity that is increasingly scarce will incentivize conservation in Utah, especially if the amount charged is based on water consumption.
This last point is crucial. The purpose of the property tax adjustment is water conservation, not fundraising for additional water infrastructure. A property tax adjustment based on a flat rate — disconnected from use — would only increase revenue, without incentivizing conservation at all. The desire to raise revenue shouldn’t overshadow the goal of conservation. When a sufficient consumption-based rate is introduced, users will conserve water, limiting the amount of revenue generated by the tax adjustment.
Conservation should be a priority, rather than new infrastructure, because despite being the second driest state in the nation, Utah has comparatively low costs when it comes to delivering drinking water to its people. The groundwater in Utah requires little treatment. It is delivered to the valley by gravity (rather than being pumped), and most of the population lives in relative proximity to the water sources and to each other. These factors create low overhead costs for water distribution in Utah, but they should not trick us into thinking that water itself should come at a low cost.
To put this another way, Utah is like the experienced diamond cutter who can prepare, polish and evaluate diamonds quickly and easily. For this diamond cutter, the costs of preparing a single diamond for sale are lower than that of a novice. Still, diamonds are so rare that the savings induced by choosing the experienced diamond cutter do not make diamonds cheap and affordable for consumers.
While not yet as rare as diamonds, water is far more important to our lives, economy and environment. As it becomes increasingly scarce, the amount we pay for it should reflect this. In this time of inflation, consciously choosing to raise the price of water this way may seem politically foolish. Still, if water consumption is not better aligned with water cost, conservation will receive little attention outside of well-intentioned PR campaigns.
Tying a portion of property tax to water consumption for every user would be a significant change to how Utah values its water. Yes, it would increase costs for some users — there are problems yet to solve regarding how county tax assessors might assess municipalities’ consumption and tax them accordingly. But it would be worth it. Low prices communicate low value to consumers. No one wants to pay more for water, but the alternative has become increasingly worse.
In a place where water is so scarce, it is time our budgets reflect it.
Micah Safsten
Micah Safsten works as communications and outreach coordinator at the Utah Water Research Laboratory, Utah State University. He holds a master’s degree in political science from USU and has interned in both Congress and the Utah Legislature. His views do not necessarily represent those of his employer.
