California Legislature Wants to Tax Drinking Water for First Time in History

Although Senate Bill 623 is titled: “Safe and Affordable Drinking Water Fund,” a coalition of agricultural and environmental lobbyists convinced its author Sen. Bill Monning (D-Carmel) to amend the ground water cleanup bill that has been moving through the Legislature since February, to quietly add a water tax of 95 cents per month on every residence and business. The bill would also tack on $30 million in farm and dairy fees.

The European Union first promoted an environmental tax on water under the cover of the imminent global warming crisis. But the 28 nations of the EU have expanded their water taxation regime to include a tap water tax; a value added tax on all water purchases; a provincial groundwater tax; and a tax for installations on public land or water.

A similar environmental tax was proposed as SB-20 in 2015 at the end of California’s 5-year drought by California Senator Fran Pavley (D- Conejo Valley), author of AB 32, the Global Warming Solutions Act of 2006 that created the cap and trade tax tsunami.

But her water tax effort ran into blistering opposition from California’s 317 water districts and agencies that complained it was an effort to use the drought crisis as justification “to fund another layer of administration in Sacramento.” The effort failed when it did not get any Republican crossover support for the 2/3 constitutional requirement to pass a tax.

California has never taxed drinking water, which has always been exempt as an essential “food product” by the California State Board of Equalization under Regulation 1602. Other tax-exempt liquid food products included non-carbonated fruit and vegetable juices. The tax-exemption was expanded in 1981 to include bottled water.

The main reason that the Legislature had avoided taxing water is the long and bloody California history of water wars that date back to the 1849 gold rush. Mark Twain famously commented that in California: “Whiskey is for drinking; water is for fighting over.”

But in an unprecedented turn, the powerful Western Growers that represent large farmers in California, Colorado, Arizona and New Mexico released a statement supporting SB-623 to provide clean drinking water to disadvantaged communities that cannot afford clean drinking water. The growers acknowledged the challenges of agriculture relying on nitrogen-rich and its runoff impact on water quality.

The Western Growers in a landmark statement added, “working with the environmental justice community, as well as other stakeholders, for over a year in an effort to address the critical needs in disadvantaged communities relating to safe drinking water. Since these challenges are numerous, both from naturally occurring contaminants and human sources, we believe the solution should be shouldered by a broad array of stakeholders.”