Los Altos Hills residents, city councilmembers and even the Santa Clara Valley Water District Board chairman have protested taxes for water the district doesn’t deliver.
“We’re getting taxed for something we’re not receiving, and dagnabbit, it’s unfair,” said city councilmember Gary Waldeck during the council’s specially scheduled April 20 meeting.
Now, as city officials weigh joining forces with other Santa Clara County municipalities protesting the contested State Water Project (SWP) Tax, Santa Clara Valley Water District representatives are attempting to address concerns.
On invitation from the council, Santa Clara Valley Water District Chief Operating Officer Jim Fiedler delivered a 10-minute presentation at the council’s April 20 meeting summarizing the water district’s role in the county and the history of the SWP tax.
The SWP tax funds the SWP, a statewide water storage and delivery system that provides supplemental water to 25 million California residents, including some in Santa Clara County. Although an estimated two-thirds of Los Altos Hills residents don’t receive SWP water, they pay SWP taxes to the water district so that it can fu
lfill a contractual obligation to the state. Each property owners’ tax burden is based on the assessed value of his or her property.
North versus south
Local opponents of SWP taxation have characterized it as “highly unusual,” “unfair” and even “insane” and suggest the district pay SWP costs from rates charged to water users.
The legislation that mandates the SWP tax requires the contractual obligation to be funded primarily from rates, with taxation used only if the buyer is unable to fund it via rates, according to Steve Jordan, a member of the Purissima Hills Water District Board of Directors who contests SWP taxation of those who don’t receive SWP water.
Relying on taxes rather than rates encourages higher water consumption during a drought, violates the original enabling legislation for the SWP and is likely a violation of Proposition 13, Purissima Hills Water District representatives have said. Purissima Hills – the water supplier for most of Los Altos Hills – obtains Hetch Hetchy Reservoir water from the San Francisco Public Utilities Commission.
“The Santa Clara Valley Water District has concluded it has the ability to tax no matter what, and the board, which has been historically dominated by the south county, is looking north and saying, ‘That high tax base can help reduce rates to the rest of the county,'” Jordan said.
According to the Santa Clara Valley Water District, property taxes have funded the full State Water Project Contract costs for many years.
“Each year, the district board of directors sets the property tax amount in an open-session board meeting, based on the anticipated cost of the State Water Project Contract for the oncoming year,” said a statement issued to the Town Crier by the district. “When the board reasonably determines it is necessary, Section 11652 of the California Water Code requires the board to levy a tax sufficient to assure payment of sums due under contract.”
The Santa Clara Valley Water District plans to collect an estimated $26 million in SWP taxes during the 2015-2016 fiscal year, a sum that equates to approximately $44 per single-family residence.
‘Fair’ share
Compounding discontent is that south county residents pay just a percent of the water rates paid by north county residents: For every dollar north county residents pay, south county residents – the beneficiaries of agricultural subsidies – pay 6 cents.
“Plus, they get that State Water Project tax rebated back to them, for a project they benefit from,” said Gary Kremen, Santa Clara Valley Water District Board chairman, during the March 31 Los Altos Hills City Council meeting. “Plus, they don’t pay for their capital improvement immediately like everyone else does. Additionally, they get to borrow it from the north and pay it over 30 years. So it’s kind of a good deal down there.”
Kremen – whose successful 2014 campaign for a seat on the water district board included a position against SWP taxes for homeowners who don’t receive SWP water, including those in Palo Alto and Stanford – said he attended the March 31 council meeting as a Los Altos Hills property owner, not as a water district representative.
“I’m not here to justify the water district’s position,” Kremen told councilmembers. “In fact, I’m very much against it.”
The Santa Clara Valley Water District justifies taxation of areas not serviced by SWP water by listing indirect benefits such as the countywide reduction in land subsidence (sinking ground) and saltwater intrusion due to groundwater overdraft. The water also has boosted the overall economic growth of the region, according to the district.
“There are many taxes we pay that you may argue we don’t receive the direct benefits of,” Fiedler said during the April 20 council meeting. “For example, you may be at an age where you no longer have kids in the public school system yet your property taxes are paying for schools…you may pay money into a fire service through taxation and yet you’ve never had a fire at your residence…And yet those are valuable services.”
