Utah lawmakers questioned the accuracy of a state-commissioned study on Wednesday that served as the basis for a failed legislative proposal that would have pressured water suppliers across the state to collect more money from taxpayers. The hearing followed an investigation by KSL that revealed the study did not consider existing revenues collected by water providers.
Challenges to H.B. 501
The Legislature's Political Subdivisions Interim Committee held the hearing to hear testimony regarding H.B. 501, a bill that did not pass during the 2026 legislative session. Under the proposed legislation, water and sewer providers seeking state infrastructure money would have been required to meet a specific local revenue threshold. This threshold would have been tied to the median adjusted gross income in a provider's service area and the number of connections served.
Disputed Funding Projections
The study, which cost taxpayers approximately $170,000, projected an annual water infrastructure spending need of approximately $1.2 billion during the early years of a plan extending to 2070. It estimated that local providers could raise much of that amount through rates, leaving a projected annual funding gap of $346 million. However, the study's findings have come under intense scrutiny from both legislators and utility representatives.
Legislative Skepticism
Rep. James Dunnigan, R-Taylorsville, expressed doubt regarding the reliability of the study's conclusions during the hearing. "It seems to me, best I can tell, that the information provided and the results from that are flawed," Dunnigan said.
Omission of Existing Revenue
The controversy stems from how the study calculated future needs. While the analysis focused on future projects identified by water providers, KSL's investigation found it failed to account for current revenues that utilities might already have in place to fund those projects. Danyce Steck, the administrative services director for West Jordan City, told lawmakers that state researchers asked utilities for lists of future projects but did not inquire about existing resources, reserves, or excess income.
The Wish List Comparison
Steck compared the state's data collection process to receiving a holiday wish list. "It almost felt like, quite honestly, you got, I as a kid, I remember getting the Sears catalog and like going through and picking out all the toys I wanted and I put in that list to my parents. I never asked them anything past that. I just gave them the list," Steck said. She noted that while the state asked for project lists, they did not ask about capital management financing plans or reserves, leading to a list that she suggested was an excess of actual need.
Revenue vs. Expense Analysis
The Utah Rivers Council presented findings that directly challenged the state's $1.2 billion annual figure. Executive director Zach Frankel stated that his organization spent the summer reviewing financial disclosures from 76 Utah water suppliers, representing approximately 63% of the state's population. According to Frankel's analysis, those providers reported roughly $2 billion in annual revenue against $1.2 billion in expenses, leaving nearly $780 million in net revenue after bills were paid.
Calls for Comprehensive Analysis
Frankel criticized the failed legislation, calling it "one of the most egregious proposals I have seen," and urged state leaders to pursue a more comprehensive analysis. He argued that any new charges should be supported by a clearer accounting of the specific projects that require funding, noting that the current fee study did not identify the specific projects underlying its cost projections.
