27
Mon, May

MWD Board Approves Budget with Double Property Tax, Sparks Transparency Concerns

LA WATCHDOG

LA WATCHDOG - On April 9, the politically appointed Board of Directors of the Metropolitan Water District of Southern California approved its Biennial Budget.  This budget includes rate increases to its 26 member agencies of 8.5% in both 2025 and 2026.  This budget also includes a doubling of the property tax that MWD levies on all property in its 5,200 square mile service territory that spans portions of six Southern California counties.

By relying on property taxes, the City of Los Angeles, along with Orange and San Diego Counties, are subsidizing numerous other agencies because our relative property taxes are higher than our share of the water purchased from MWD. This is especially true because of DWP’s water conservation programs and the water we receive from Owens Valley via the Los Angeles Aqueduct.  

As a result, the City’s five representatives on the MWD Board, representing 21% of the votes, abstained when voting for the Biennial Budget. 

More worrisome is that MWD increased our property taxes without a vote of the electorate.  And while the current tax is miniscule, that will not be the case in the future. 

Prior to this unilateral tax increase, a homeowner would have paid $35 on a house assessed at $1 million.  This amount will increase to $70 because of the less than transparent doubling of the tax.  

This tax will most likely increase significantly, possibly almost ten times the current level of $35 for the owner of a million-dollar house, all without the approval of the voters.   

Over the next ten years, MWD has developed an $11 billion capital budget to improve water quality, reliability, distribution, IT, and other key projects. This does not include expenditures for its $20 billion Pure Water Southern California recycled water program or the $10 billion for its share of the Delta Conveyance Project.   

Over the next ten to fifteen years, the level of MWD debt may grow to be in the range of $30 billion, up from the current amount of around $4 billion. At these levels, debt service for principal and interest would be in the range of $2.0 billion per year, or almost ten times the current level of taxation. 

During the Board meeting, MWD claimed that it was an open and transparent organization.  Not so. I have been following DWP and its water system for over 15 years and the first I heard of this tax increase was in the middle of March, long after MWD began consideration of the increase in the property tax. 

As part of its efforts to be open and transparent, MWD should develop a simple, easy to understand ten-to-fifteen-year plan that outlines the impact on rates and taxes of its ambitious capital expenditure program.  This would be accompanied by meetings with consumers, the end users of the water, and voters.  MWD should also place a measure on the ballot to approve these significant increases in our property taxes.  

Will MWD be an open and transparent organization?  

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)

Get The News In Your Email Inbox Mondays & Thursdays