Liquid News

Property Taxes Help Keep Irvine Ranch Water District Rates Low

The Orange County Register recently posted an article suggesting that public agencies such as the Irvine Ranch Water District should raise customer rates by forgoing use of local one percent property taxes. We thought we would take this opportunity to explain to our customers how these  property taxes help keep your water rates among the lowest in Orange County.

IRWD finances the facilities it needs in order to provide water and sewer service to our customers by issuing general obligation bonds, much like you finance your home with a mortgage from the bank. IRWD uses the one percent property taxes received from the state, along with other local property taxes and new connection fee revenue, to make payments on these bonds. This makes sense - property owners directly benefit from the water and wastewater infrastructure and services their property taxes have paid for.

Bonds issued by IRWD are typically used to fund basic water and wastewater infrastructure – which includes projects like reservoirs, groundwater wells, water pipelines, water pump stations, sewage lift stations, sewage treatment and disposal capacity, and sewage collection pipelines. This enormous infrastructure serves about one fifth of Orange County and includes more than 1,100 miles of drinking water pipelines, more than 400 miles of recycled water pipelines, more than 900 miles of sewer pipes, 53 reservoirs, and two large wastewater treatment plants.

In fiscal years 2004-05 and 2005-06, the state grabbed a total of $19.4 million of the District's one percent property tax allocation in a budget-balancing maneuver. The “temporary” taking of that property tax revenue directly resulted in an increase in new service connection fees and local property taxes. Years later, the state still owes IRWD customers $2 million—and the state budget is still a portrait of fiscal chaos.

The Orange County Register article clearly and strongly suggests it would be the responsible thing to do for the state to once again hijack property tax revenue from special districts. As we have illustrated, that would be the opposite of prudent, responsible policy. Such a shift, whether temporary or permanent, would once again result in connection fee and local property tax increases. A permanent redirection of that tax revenue into state coffers could well lead to increased monthly user rates.   

Even when the state takes property tax funds away from local agencies such as IRWD, our customers still continue to pay the same one percent property taxes to the state plus any additional IRWD imposed taxes and fees necessary to pay our infrastructure bond payments.  In the end, this is a roundabout way for the state to quietly raise taxes by forcing IRWD to increase fees and assessments to offset the property tax revenues taken by the state.

Lastly, when IRWD or other local districts use property taxes, taxes are used locally under the watchful eyes of our customers. On the other hand, when the state takes local property taxes the money goes to the state to be spent on programs far removed from local oversight.

To learn more about IRWD finances, please visit our website.

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