Aug 26, 2003

Proposed Fees Would Penalize Districts for Water Storage, Impose Selective Tax

ACWA Urges Opposition of Increased Dam Safety Fees

The Association of California Water Agencies' (ACWA) and a coalition of other water industry organizations put the Legislature on notice August 19 by sending a letter in opposition to a proposal that would financially penalize water districts for water storage.

Though not yet in bill form, the so-called "dam safety fee" proposal will likely be introduced as a trailer bill to the state budget act. If enacted, this proposal would alter the current Department of Water Resources Dam Safety Fee program to involve a new 20-cents-per-acre-foot charge of total dam or reservoir water storage or flood control capacity.

"Water storage for drinking water, environmental uses, and flood control purposes are a benefit to all Californians and a fair portion of General Fund monies should be utilized to provide this critical public health and safety service. Taxing agencies for saving water is nothing less than counter-intuitive," said ACWA Executive Director Steve Hall.

Presently, the annual dam safety fee charges a $150 flat fee combined with a cost of $16 per foot of dam height. In addition to raising the flat fee and tripling the dam height charge, this new proposal adds a third charge within the dam safety fee, penalizing water storage. The coalition, which is comprised of ACWA, the California Farm Bureau Federation, the California Municipal Utilities Association, the Los Angeles Department of Water and Power, the Northern California Water Association and the Regional Council of Rural Counties, believes this proposal is shortsighted and does not appear to have a direct nexus to the new water volume charge.

If this proposal becomes law, water districts with dams or reserviours would suffer substantial financial impacts. For example, Turlock Irrigation District (TID) presently pays $19,000 annually in dam safety fees. This new proposal would drive up TID's cost to $453,000 annually. Yuba County Water Agency currently pays $15,248 annually and could potentially see the fee rise to $231,041 -- a more than 1000% increase.

"It remains unclear how the cost for the current program could rise so dramatically as to cause dam safety fees to skyrocket by hundreds of thousands of dollars," Ridderbusch said. "The Legislature should refrain from taking an approach that would create a new tax for the storage of existing water in California in order to help close the budget gap."