The Utah Rivers Council is urging state officials to eliminate property taxes used to subsidize water rates, arguing the current system incentivizes excessive water waste and places an unfair financial burden on low-income families. The organization claims that Utah's unique tax-based water pricing makes the state the highest water user in the nation.
Incentives for Water Waste
The Utah Rivers Council stated that Utah is unique among American states because it collects property taxes from homeowners and businesses to lower the retail price of water. According to the organization, this practice results in Utah having some of the cheapest water rates in the country, but it also makes Utah the nation's most wasteful water user.
Subsidies and Infrastructure Costs
The Council argues that these taxes function as a government-funded subsidy that artificially lowers the cost of a commodity, which inherently increases consumption. The organization contends that this high water use creates an illusion of future water shortages, which is then used by proponents of expensive water projects to justify massive taxpayer spending. One such example cited is the $3 billion Bear River Development.
Market-Based Conservation
The Utah Rivers Council suggested that if property taxes were phased out, the economic shift would allow individual users and the free market to determine the true price of water. The organization compared the current tax structure to someone placing $200 on a kitchen table and allowing a person to choose between keeping it in their wallet or using it for a garden hose.
Comparison to Other States
The debate over water funding highlights a significant divergence from how other states manage resources. The Utah Rivers Council noted that 78% of water suppliers in other states do not collect property taxes, opting instead to price water at its real market value and charging customers only for what they actually use.
Burden on Low-Income Families
The organization also highlighted the disparate impact of the current tax system on different socioeconomic groups. While low-income families use only a small fraction of the water consumed by large landowners, they end up paying for that usage through higher property taxes. This creates a situation where low-income residents pay a much larger percentage of their total income to subsidize the water use of higher-income residents, governments, and large institutions.
Proposed Tiered Rate Structure
To address the potential loss of revenue from phasing out property taxes, the Utah Rivers Council proposed a tiered water rate structure. This model would shift costs toward outdoor water use, where the majority of municipal water is consumed. By charging larger users the actual price of the water they use, the system would reward conscientious conservationists without requiring an increase in indoor water rates.
Potential Economic Benefits
The organization cited an economic model from the University of Utah to support its claims, noting that the state could save billions of gallons of water annually while simultaneously reducing the tax burden on residents and businesses. This reduction in waste would potentially delay or eliminate the need for billions of dollars in taxpayer-funded debt for unnecessary water infrastructure projects.
