MWD Taxing Homeowners to Cover Up True Cost of Water

LA WATCHDOG - In April, the politically appointed directors of the Metropolitan Water District of Southern California approved the $2.3 billion budget that includes a rate increase of 6.2% for its 26 member agencies.  It also announced a “small increase” in its special tax on properties that amounts to $12 a year for the average home in its 5,200 square mile service area.\

This benign announcement is environmentally unfriendly because it covers up the real cost of water. This sends the wrong price signal to Ratepayers, discouraging conservation and encouraging consumption of our scarce water resources. Just think of the well-publicized water shortages involving the Colorado River. 

To help lower rates and hide the true cost of water, MWD levies a property tax on all the real estate in its service territory. Prior to 2024, the rate was 0.0035% of the Assessed Value of more than $4.2 trillion, or $35 for each $1 million of value.  In 2004, the rate was doubled to $70.

And now, in 2026, MWD is increasing the rate by 21% to $85. This will allow MWD to lower the rate increases by $40-60 million (a “small increase”), thus lowering the rate increase to 6.2% from the proposed 9.5% that was considered at the beginning of the budget process.

Overall, this cost shifting tax will cost property owners at least $465 million a year. 

If this tax were repealed over a four year period, rates would increase by around 25%. But property owners would save $465 million and we would conserve more water.

MWD justifies the property tax because it is “essential to its financial integrity.” Baloney. MWD has cash reserves of over $1.6 billion, an amount that exceeds its annual operating costs.  It also has considerable pricing flexibility because it is a monopoly. It has billions in debt capacity because of its high credit rating.  And the less than transparent MWD bureaucracy has never demonstrated to the public why this controversial property tax is essential. 

These recent increases in this tax were not approved by the Board members representing the Los Angeles Department of Water and Power.  But they were approved by the Orange and San Diego County representatives whose property owners are hit up for almost $150 million a year in property taxes.  If these two counties teamed up with DWP, these tax increases would not have passed.

Underlying the approval of the property tax is that the directors are appointed by the agencies they serve who do not want to increase rates to their customers despite the need for conservation. These agencies are not held to account by the County Supervisors because this tax flies below their radar screen. So, everybody is happy except for the property owners.

The directors need to be accountable to the voters, not to the agencies that control their appointment to the Board. Instead, elected officials, including the Orange and San Diego Supervisors, need to assert their authority and demand that MWD send the conservation saving price signals to Ratepayers and end the cost shifting property taxes. 

And just imagine the voters reaction if DWP asked voters to approve a property tax to finance its Water System!!!!!

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The following shows the taxes by the agencies served by MWD.

(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 lajack@gmail.com.)