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“Water Tax” Stalls in the State Senate

Legislature Still Considering Multiple Alternative Proposals for Safe Drinking Water

May 17, 2019
Gov. Gavin Newsom’s May budget proposal to place a tax on water to fund clean drinking water across the state failed to advance in a Senate budget subcommittee on Wednesday.
Instead, the Senate budget subcommittee voted to adopt new budget trailer bill language that would continuously appropriate $150 million from the state’s General Fund to a Safe Drinking Water fund proposed in and contingent upon the passage of SB 200 (Monning).

While the water tax budget proposal failed in the Senate, the Assembly is still considering AB 217 (Garcia, E), which still contains a tax on water. The League remains opposed unless amended to any proposals that place a tax on water and will continue to monitor these proposals as they advance.
Overview on the Water Tax
Over the last several years, providing safe drinking water throughout California has been a priority of the Legislature. In 2017, Sen. Monning introduced SB 623 (Monning), which first addressed the creation of a safe, affordable, drinking water fund. That bill ultimately died in 2018 after being rolled into a budget trailer bill, however the Legislature vowed to address the issue in the future. This year, Gov. Gavin Newsom came out strong on providing clean, safe, affordable drinking water for all Californians, including such a proposal in both his January and May budget proposals.

The Governor’s May budget proposal included a monthly tax on residential water users and the establishment of “Safe Drinking Water Fees” for dairies, fertilizer users and various animal farmers. The language was adapted from SB 623 and associated budget trailer bill, which intended to fund clean water programs by imposing a new statewide tax on water, as well as fertilizer and dairy fees. The Governor’s trailer bill fee seeks to generate an estimated $100 to $110 million annually, which would be utilized for the refurbishment of California’s failing water systems.

The League, along with a broad coalition of nearly 200 local water and public agencies opposed the proposed water tax unless amended, arguing that an alternative funding source, such as the water trust fund in SB 669 (Caballero), was a better choice than a tax on water. With hundreds of state-regulated water systems throughout the state not meeting safe drinking water standards, an estimated one million Californians are exposed to harmful chemicals in their drinking water.
With the failure of SB 669, the League is supportive of the Senate’s rejection of the Governor’s trailer bill language in favor of an alternative funding source than levying a tax on water. It is clear that this issue is a priority for the Legislature and Governor this year, as the League anticipates a deal will come together on this later this session.
Next Steps
The League is encouraged by the development of a potential budget deal on an alternative funding source than a tax on water to address the issue of safe drinking water and will continue to monitor the various proposals through the legislative process.

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