PRESS RELEASE

February 21, 2002

Contact: Janice Houston, Senior Research Analyst
(801) 288-1838, ext. 123
janice@utahfoundation.org

WATER DEVELOPMENT IN UTAH HAS A HISTORY OF PUBLIC FUNDING FOR THE BENEFIT OF ALL CITIZENS

Utah Foundation has released a new research report entitled "Creating An Oasis: Water Development and Funding in Utah." This report describes the history of water development in the state and the role tax funding plays in developing water resources. The report should be attached to this release; if not, it may be obtained at: http://www.utahfoundation.org/reports.html. Some of the key highlights of this report are:

• Water, since the earliest Utah settlements, has been viewed as a resource that must be developed in a way that brings the maximum benefit to the largest number of people.
• Water development evolved through three main stages; a localized, cooperative period, a wave of private, for-profit development, and the current model of government-planned resource development.
• A significant portion of most water agencies' revenue comes from property tax.
• For water to arrive at a citizen's tap, the process involves a water developer, a wholesaler, and a retailer. Sometimes this creates a complicated structure of overlapping districts, each levying separate property tax rates on the same properties.

The report discusses Utah's unique cooperative water resource management approach at a time when other western states were adhering to a strict 'first in time, first in right' water policy. Continuing through the history of the state, the report discusses the importance of the Reclamation Act of 1902 and the subsequent involvement of the Bureau of Reclamation in Utah water development. The report also includes a brief description of the variety of water agencies involved in the development and sale of water within the state.

Senior Research Analyst Janice Houston said, "The complexity of water management in Utah is surprising. The many overlapping agencies with different missions sometimes cause conflicting rules, such as conservation efforts running up against city requirements for bluegrass lawns or other thirsty landscapes."

As most water agencies depend on tax revenue for a significant portion of their support, a brief analysis of property and sales tax concludes the report. The average water retailer obtains 29.6 percent of its revenue from taxes and fees. Wholesalers and developers also rely on tax revenue. Of the selected wholesalers and developers chosen for this report, the reliance on tax revenue varies from 5.9 percent of annual revenue to 95 percent. Most tax support for water agencies comes from local property taxes; however, in 1997, a portion of the state sales tax was dedicated to funding water and transportation projects. A pie chart is provided in the report detailing the allocation of this sales tax for water development projects.

This is the first of two reports Utah Foundation will publish this year on water policy. The second report, to be released in April, will provide greater detail on water pricing, tax funding, and conservation.

Utah Foundation is a nonprofit, non-advocacy research organization. Our mission is to encourage informed public policy making and to serve as Utah's trusted source for independent, objective research on crucial public policy issues.