State audit reveals Washington County can afford Lake Powell Pipeline. Can citizens?
The August 2019 audit by the state’s Auditor General’s office reveals that the Washington County Water Conservancy District can afford the cost of the proposed Lake Powell Pipeline, but the question of whether or not citizens can afford it remains to be answered. A taxing entity can always raise taxes and fees but that doesn’t mean citizens are able to absorb those increases easily or equitably.
Years ago, when the Lake Powell Pipeline project first became a topic of conversation locally, our WCWCD manager Ron Thompson stated in many newspaper articles and at events that “growth would pay” for the pipeline. It’s clear from this audit that while growth will only pay for part of the cost of the pipeline, vigorous growth will be required nonetheless. Sure, growth impact fees will catch newcomers, but they will also catch existing citizens who want to upgrade to a new home. However, impact fees are not the only resources the district plans to tap. Also included with impact fees are increased water rates and increased property taxes.
Even as the audit asserts that the district can repay the debt, it also acknowledges that “revenue sources are subject to future uncertainty.” Where could that uncertainty take us? Once the pipeline is built, contractors must be paid. The debt is on the books, and there is an obligation to pay. The district may be able to raise impact fees, water rates, and property taxes, but at what cost to citizens? More unaffordable housing in our county? Water rates so high that usage plummets, making the Lake Powell Pipeline unnecessary, as I and many assert it already is?
The following rates will need to increase to enable repayment by the district:
—Impact fees are planned to increase by up to $1,000 annually from the 2017 fee of $7,417 through 2026, reaching $15,448.
—Wholesale water rates are planned to increase by $0.10 annually from the 2016 rate of $0.84 to $3.84 per 1,000 gallons.
—Property taxes are planned to increase from the 2018 rate of 0.0648 percent to 0.1 percent by 2025.
Also, the $3.84 per 1,000 gallons is “wholesale” only. Once the “wholesale” water reaches Washington County cities, they will raise their rates to accommodate their ability to repay the district. So whether rates go up to help people conserve or they go up to help pay for the Lake Powell Pipeline, they will go up. Personally, I’d prefer to pay more for the water I use without having to carry the pipeline’s burden for impact fees and property taxes as well.
The water district already plans to raise property taxes to 0.1 percent by 2030; however, the audit asserts that they would need to be raised even before then.
The audit asserts that property taxes provide a more stable source of income to the district. What then would happen to people’s property taxes if growth does not provide the impact-fee and water-rate support needed to pay the debt? How high will property taxes climb? Should we really count on our county’s growth to save the day?
The audit even identifies uncertainties in the 2006 Lake Powell Pipeline Act concerning repayment by the county — uncertainties that make it unclear whether or not the county must repay the interest due to the state on the loans for the project. In fact, the audit models used $1.8–$2.4 billion as repayment figures — which do not include interest on the loan. For many years, leaders have asserted that the repayment requirement is very clear. Apparently, that’s not true (who knew, right?), and different methods evaluated in the audit can mean a big difference for Washington County residents who will be on the hook for impact fees, water rates, and property taxes to repay.
So if that interest must be repaid, is the pipeline really affordable for the district? That remains unclear.
Also unclear is how the “contracts” for water must be paid and whether or not there is an actual repayment time limit. Perhaps the county could leave the state on the hook for this for a very long time, leaving the state in a position where money for other needs may be lacking. If the legislature does not address these repayment concerns, the decisions will be left to unelected officials of the Board of Water Resources.
What if growth slows? The audit states: “The ability to generate this revenue growth is dependent on planned rate and fee increases occurring coupled with the realization of estimated population growth set forth by the Kem C. Gardner Policy Institute.” Since Utah’s 2011 Water Needs Assessment population projection of 860,000 by 2060, our population projection has dropped over 400,000 new residents. Given that record, it’s safe to say that it might decrease again in the future. Perhaps as people continue to learn about the problems western and southwestern states face with water scarcity, they will reconsider whether a move to southern Utah is a wise decision.
Finally, but not least importantly, the audit only evaluated the projected cost of the Lake Powell Pipeline and the district’s financial ability to repay. The audit’s first paragraph admits: “Washington County’s future needs for water and the availability of water in the county and Lake Powell were not within the scope of this audit.” So is it really fair to uncouple the ability of our district to pay from any actual need in this county? Surely “need” should be part of the decision, but an honest discussion about that is not being had. Excessive water use continues to drive the need. Perhaps the biggest question is not really whether or not we afford the pipeline but rather whether or not it will actually deliver the water that leaders think it will. With Colorado River flow projections heading downward, only Mother Nature knows for sure.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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