Utah Water Policies Labeled 'Socialistic'

A new research report suggests that public policy in Utah may be distorting the true cost of water.

"Using property taxes to subsidize the delivery of water to homes and businesses in this, the second-most arid state in the nation, distorts the market and hides the true cost of collecting, treating, and delivering water," according to the Salt-Lake Tribune editorial board, citing a research report from the Utah Foundation, a think tank.

These policies inadvertently muddle the free market, according to the editorial board, which labelled the approach "socialistic."

"In a state that supposedly values free-market principles as much as Utah does, it might be surprising to learn that our water utilities are shielded from passing their true costs of operation through to their customers," the editorial said.

Utah is the only state that uses such a practice, the editorial said, citing the Utah Rivers Council.

How do water districts feel about this the current funding mechanisms?

"Water districts are proponents of maintaining the existing combination of funding – user fees, property taxes, and impact fees. The use of property tax revenues creates a consistent revenue stream to finance projects that take years or even decades to develop, build, and fully utilize. Additionally, general obligation bonds backed by property taxes have more stability and the potential for lower rates," the research report said.

But a significant set of a groups oppose this policy.

"Environmental groups, economists, academics, and the Utah Taxpayers Association propose changing the system. While it may be unusual for these groups to support the same strategy, they all see the use of property tax allocations as a method of subsidized water rates and thus a disincentive for conservation. One theory supporting increasing water fees suggests that if water demand falls due to price increases, the impact will be the most effective and permanent due to the reduction being spurred by the consumer’s best interest," the report said.

Utah has a significant set of water challenges to worry about.

"We only have so much water, and the supply is less reliable because our weather patterns are changing, yet we have the second-fastest growing state in the nation with a growing demand," said Mike Styler, executive director of the Utah Department of Natural Resources, per the Deseret News.

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