FAQs on Proposal to Tax Californian’s Drinking Water

A proposal attempting to establish California’s first-ever statewide drinking water tax is currently being advanced in a Brown Administration budget trailer bill. (It was originally proposed in 2017 in SB 623 by Sen. William Monning (D-Carmel), which is now a two-year bill.)

The proposal is being billed by supporters as a way to address a lack of access to safe drinking water for some rural, disadvantaged communities. Supporters of the drinking water tax believe a new tax levied on California homes and businesses is the best way to solve this problem.

However, the Association of California Water Agencies (ACWA) is currently leading a large coalition of business organizations, cities and water agencies which strongly oppose the proposed a tax on Californian’s drinking water. While the coalition agrees with the goal of assisting disadvantaged communities without safe drinking water, it believes a statewide drinking water tax is not the right approach to funding safe drinking water solutions. Instead, ACWA is proposing a package of funding solutions that would not require a new tax.

Here are some frequently asked questions on the issue:

Q: Why do some disadvantaged communities lack access to safe drinking water?

A: The vast majority of Californians have access to safe drinking water. However, there are some rural disadvantaged communities in California with water sources that have been impaired by contaminants such as nitrates and arsenic. In some areas these contaminants are naturally occurring, in other areas it is a result of water pollution. Nonetheless, for some low-income communities, treatment solutions are financially out of reach. This is a serious public health and social issue that must be addressed.

Q: What does the Brown Administration trailer bill propose?

A: The Brown Administration budget trailer bill, which was modeled after SB 623, seeks to establish a statewide tax on residential and business water bills in California to help fund safe drinking water solutions in certain areas of the state.

If passed, the bill would levy California’s first-ever statewide tax on water. Residential water bills would be assessed a $0.95/month tax, and business water bills would see up to a $10/month increase. Individuals that do not meet a minimum income requirement would be exempt from paying the tax. Thousands of local water agencies would be required to collect that tax and send all of it to Sacramento for distribution to the communities in certain areas of the State that have the problem.

Q: That doesn’t seem like a lot of money. Why oppose the tax?

A: Local public water agencies are committed to providing safe and reliable water and agree with the goal of assisting disadvantaged communities without safe drinking water but oppose the tax on drinking water for several reasons.

First, the state should not tax something that is essential to life, such as water and food. Also, the public is concerned that the cost of living in California is already too high.

Additionally, a tax on drinking water would work against the goal of keeping water affordable for Californians. This new law would turn thousands of local water agencies into tax collectors for the state of California.

What’s more is the budget trailer bill isn’t the only proposal to tax water that is being considered at the state level. Other state agencies are also discussing plans to tax water to fund a number of other program areas. The budget trailer bill would set the precedent for such additional taxes.

Q: Will the taxes I pay help my community?

A: It’s possible, however, it is not guaranteed. Communities that have safe drinking water would not receive any benefit from the tax they pay. The money raised through the tax would go to Sacramento to a fund to be distributed by the State Water Resources Control Board to communities that do have the problem.

Q: How do California residents feel about the proposed drinking water tax?

A: Tulchin Research recently conducted a statewide poll showing that 73% of likely voters oppose a new tax on drinking water, both initially and even after learning how the funds were intended to be spent.

Additionally, 74% would prefer using existing funding sources rather than establishing a new tax on drinking water.

To learn more about the poll, click HERE.

Q: What other solutions are being proposed?

A: ACWA and a large coalition of business organizations, cities, and water agencies are advancing a more appropriate funding packaged comprised of ongoing federal funds from the Safe Drinking Water State Revolving Fund (SRF), voter-approved general obligation bonds, the agricultural assessments related to nitrates in groundwater that are proposed in the budget trailer bill and SB 623 and a modest amount of general fund dollars (less than 1/10 of 1 percent of the state’s general fund). ACWA and the coalition have also developed additional funding solutions, such as the creation of an irrevocable trust. The Governor and the Legislature can solve this problem without imposing a state tax on water.