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Proposal to tweak Utah's property tax laws could force water conservation

Posted at 4:13 PM, May 11, 2022
and last updated 2022-05-11 19:44:04-04

SALT LAKE CITY — A proposal has been unveiled that would rework Utah's property tax policy that advocates believe could force increased water conservation.

Sen. Dan McCay, R-Riverton, who chairs the Utah State Senate's Revenue & Taxation Committee, announced the idea at a conference of the Utah Taxpayers Association on Wednesday. It would remove subsidies for water use from property taxes.

"In Utah, we use property tax to pay for water," Sen. McCay told FOX 13 News. "Unfortunately, what that does is it shifts the burden away from people’s monthly bill, so they know how much water they’re consuming and they can really be attached to that rate and be incentivized for conservation."

Sen. McCay said as much as two-thirds of water costs is covered by property taxes, the rest comes in the monthly bill for users.

"At some point, we need to get a point in the state of Utah where your rates are tied to how much you’re using," he said.

The idea has been attempted before, but did not gain much traction on Utah's Capitol Hill. But Rusty Cannon, the president of the Utah Taxpayers Association, said the drought is forcing the conversation again. His group is supportive of the policy shift.

"We can change that, get the right tax policy in place and as you heard here today, hopefully that’s coming soon," he said.

Cannon argued it's a fairer tax policy and would lower overall property tax rates. It would also force water conservation by financially impacting water wasters.

"Those that use a lot of water would pay more, those that use less water would pay less," Cannon told FOX 13 News.

The policy shift would also collect more money from governments like the state of Utah, and nonprofits, like churches, who currently don't pay a property tax. Sen. McCay said he was fine with that.

"I think that everyone needs to pay their share of water, right? That includes nonprofits, governmental entities, and, believe it or not, it includes the state," he said.

Some in the crowd at the Grand America Hotel were surprised by the proposal.

"All of that is under consideration right now because we are facing a historic drought," said Cameron Diehl, the executive director of the Utah League of Cities and Towns, which represents municipal governments.

Diehl said he had many questions about how it would work and whether it could keep local water conservancy districts properly funded. His group was not prepared to take a position on the concept.

"I think it’s still too early to say it should be X or it should be Y. We need to look at it holistically about what water conservation means for communities, users, infrastructure, growth, businesses, the environment. We’ve got to look at all those pieces."

Sen. McCay said he wanted to ensure water districts had money for infrastructure demands.

"At the end of the day, the water districts still need to be whole, they still need to provide water and they still need assurance of consistent revenue so they can count on it for capital projects. What we need to do is get to the end user, so the end user understands how much they’re using and it reflects in the bill," he said.

House Speaker Brad Wilson, R-Kaysville, was asked about the proposal during his speech to the Utah Taxpayers Association. He said water is a major issue facing the state and it may be something they need to have dialogue about.

The Speaker, who personally sponsored a bill to help save the Great Salt Lake, said water demands in Utah will only get worse.

"I see all these places that take water that’s not going to the Great Salt Lake, not going to Utah Lake, and it’s just being wasted and how it’s being used. We’ve got to think about that differently," he told the crowd.

Sen. McCay said he intended to discuss the idea in interim legislative hearings over the next year. Any bill could be introduced in the 2023 legislative session that starts in January.