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LA WATCHDOG - The Metropolitan Water District of Southern California proposed biennial budget contemplates a 9.5% increase in its rates for the next two years that it charges its 26 agencies. This is an increase from 8.5% increase over the last two years.
MWD is also proposing to maintain its current property tax rate at 0.007% on the Assessed Value of the properties located in its 5,200 square mile service territory. For a $1 million residence, the tax is $70. This tax is designed to raise $404 million for the 2027 fiscal year.
In the last budget cycle, this property tax was doubled.
The proposed budget is an improvement from what was considered last year because it increases the cost to users as opposed to burdening property owners. In 2025, MWD was contemplating a 5% increase in rates for the next three years. It was, however, considering an increase in the property tax from $70 to $180 over the following three years, socializing the cost of water, sending the wrong price signal to users. This would have increased the property tax revenue to over $1 billion.
According to the American Water Works Association, users should pay for their water service. It does not contemplate socializing the cost of water by property taxes.
MWD claims it needs the property tax revenue because they are “essential to the financial integrity of the district.” Baloney. MWD has almost $1.6 billion in cash and investments, has interest coverage of almost three times, and is rated AAA by the three major international credit rating agencies. It also serves 26 agencies, all of whom have investment grade ratings and can afford to pass the cost along to the 251 agencies they serve.
The property tax also falls disproportionately on property owners of the City and Orange and San Diego Counties as well as our neighbors in Beverly Hills and Santa Monica where their percentage of the Assessed Value is higher than their usage of water. This raises the question why their directors would approve any property tax, let alone an increase.
There are also questions as to the legality of this property tax since it was not approved by the voters after the amendments to Metropolitan Water Act that were implemented after the passage of Proposition 13.
The proposed budget needs to be approved by politically appointed Board of Directors. This may be problematic because the water buffalos on the Board who may not buy into the need for conservation may be reluctant to pass along the cost increases to their pals at the respective agencies.
In any case, in the name of conservation, the Board should consider eliminating this tax over the next five years and pass along the increases to the consumers of our increasingly scarce water resources. The increases in price will send the message that we need to conserve water.
(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)
