15
Mon, Jul

MWD Proposal to Increase Property Taxes to Fund New Water Supply Facilities is Unfair to Los Angeles and May Be Illegal

LOS ANGELES

GUEST WORDS - “On April 9, 2024, the MWD Board voted to double their portion of property taxes throughout their service area with little public notification. Without intervention, this property tax assessment could continue to grow to cover billions of dollars in future MWD expenses with no voter approval. ” 

This would give the Metropolitan Water District (MWD) the opportunity to use property tax  financing to cover the costs of major water supply projects such as their Pure Water Southern California and the Delta Conveyance projects, amounting to many billions of dollars. This approach would allow them to keep their water rates low.

Affordability Concerns for Los Angeles Residents

The key issue is affordability for Los Angeles residents. Funding these projects through property taxes would lead to significant tax increases for underprivileged residents, who make up a substantial portion of the LA population. These residents would have no control over the increased property taxes. Conversely, funding through water rates would incentivize and enable residents to lower their bills through conservation measures, thus reducing their water usage and expenses.

Public Outreach and Informed Decision-Making

At a minimum, MWD should be required to undertake an aggressive public outreach program to inform the general public about the need for the tax increase. Relying on input from a single board meeting, which most of the public were unaware of, does not constitute satisfactory outreach. This decision should be made through a ballot measure, allowing the public to decide whether to authorize MWD to use tax revenue for their water supply development program.

Impact on Los Angeles Water Purchases and Taxes

Over the last decade, the portion of water purchased by Los Angeles from MWD has been approximately equal to the 20% of the MWD taxes paid by LA residents. (See Below) However, these purchases will decrease significantly in the near future due to LA's investments in groundwater treatment facilities, which will restore or increase groundwater supply from the San Fernando Valley. Additional supply will come from investments in capturing stormwater in the San Fernando Basin. A large part of these investments has been funded by the citizens of Los Angeles through their water rates.  Consequently, under the MWD proposal, LA residents would pay higher taxes than their proportionate share of water usage. As a historical note, in the early years of MWD’s existence, Los Angeles taxes that were much higher than its proportional water use made possible the current MWD supply system, which is benefitting all of Southern California.

Future Water Supply Projections

The Los Angeles Department of Water and Power (LADWP) looks to secure an additional 60,000 to 70,000 acre-feet annually through new groundwater treatment facilities nearing completion. Substantial additional water supply will also come from stormwater recovery projects currently in development and more supply anticipated from the development of Operation Next.

Legal Considerations

The City should seek an opinion from the City Attorney regarding the legality of MWD’s action, which appears to contradict the restrictions on the use of tax revenue specified in Section 124.5 of the MWD Act. (See Below)

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City of Los Angeles purchases of water from MWD

            YEAR                          Acre Feet

            2014                            441,989

            2015                            355,459

            2016                            332,918

            2017                `           216,799

            2018                            182,794

            2019                            137,727

            2020                            152,578

            2021                            316,647

            2022                            366,718

            2023                            219,539

 

             AVG                             273,317

Percent of MWD Sales              19.97 %

LA % of MWD Assessed Valuation         20.76 %


(Jerry Gewe was the former head of the LADWP Water System and played a key role in the Memorandum of Understanding between the Department and the Neighborhood Councils.)