FAQs on Proposal to Tax Californian’s Drinking Water

In 2017, Sen. William Monning (D-Carmel) proposed SB 623 as a two-year bill as an attempt to establish California’s first-ever statewide drinking water tax. Previously, it was also advanced through a Brown Administration budget trailer billwhich was rejected by a Legislative Budget Committee in June 2018.

There is a new twist on the proposed water tax issue. As part of a last-minute effort before the California Legislative Session ends for the year, a new bill would impose a statewide “opt-out” charge on drinking water bills paid by California families and businesses. By changing the previously proposed tax to a voluntary contribution, supporters need only a simple majority to pass their bill SB 845 (Monning, Vidak).

SB 623 and SB 845 are 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 organizing a large coalition of business organizations, cities and water agencies which strongly oppose the proposed taxes or charges on Californians’ drinking water. While the coalition agrees with the goal of assisting disadvantaged communities without safe drinking water, it believes a statewide drinking water tax or charge 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 charge.

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: If passed, what will SB 845 do:

A: SB 845 will add a opt-out charge to to family water bills and businesses. This is different from the previous idea to tax water in that Californians will have the option to opt out of paying this new charge.

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

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 state mandates for placing additional charges with an opt-out feature on drinking water bills for several reasons.

  • This new proposal would require thousands of local water agencies and cities to manage the payment collection with the opt-out feature and forward the funds to Sacramento. While well-intentioned, the administrative costs for thousands of water systems would make water less affordable.
  • Effective funding solutions already exist for achieving this goal. In June, the legislative budget conference committee rejected the statewide water tax out of the state budget, instead setting aside $23.5 million in General Fund revenue to safe drinking water. Also in June, California voters approved Proposition 68 with $250 million for safe drinking water that is prioritized for disadvantaged communities. In November, California voters will be able to support Proposition 3 with another $500 million allocated for safe drinking water for disadvantaged communities.

Q: Will the funds I pay help my community?

A: It’s possible, however, it is not guaranteed. A vast majority of Californians have access to safe drinking water and those communities would not receive any benefit from the charge. The money raised 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 originally proposed drinking water tax?

A: In January 2018, Tulchin Research 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 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.