Article by Erik Smith. Published on Thursday, September 30, 2010 EST.

Schoesler Outraged by ‘Fee’ Proposal – Could Reopen Legislature’s Long-Time Water War

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Sept. 30.—A proposal from the Department of Ecology to assess new charges on water rights holders and applicants promises to revive a battle that raged in the state Legislature some 15 years ago.

            Just as in the ’90s, state regulators are looking to shift much of the cost of the water resources program to irrigators, utilities, developers and other holders of water-rights permits. That means a steep increase in fees for those who apply for water rights, and a new annual charge for those who have already been granted them.

            Ecology officials say the state’s current budget crisis is making the case for them. At a time when the state general fund is strapped, they say it makes sense to shift the costs to those who benefit from the program.

            And some things never change. Farm-country lawmakers say Ecology is wretchedly inefficient. Any talk of benefits brings a snort.

            “They haven’t got the message on taxes at the Department of Ecology,” said state Sen. Mark Schoesler, R-Ritzville, a wheat grower and a veteran of the last water-rights war. “Their track record is pretty dismal on agriculture. They’re not doing a heck of a lot right now. Why would irrigated agriculture pay more for an inefficient program?”

            Ecology Wants $24 Million

            The proposal comes in a report issued by Ecology this month, ordered by the Legislature last session. Right now the state’s water resources program, which manages and organizes water rights, costs about $60 million every two years. The state general fund pays about $48 million.

            Ecology would cut that in half, to $24 million. Water rights holders and applicants would pick up the slack.
            Program manager Ken Slattery says it wasn’t Ecology’s idea. The requirement that it come up with a plan was added to a bill this year by the Legislature — which, it should be noted, is dominated by urban Democrats. But since the Legislature asked, Slattery said, a 50-50 split seems only fair.
           “We have done what they asked for,” he said. “We would be disappointed if more than a few legislators thought we missed the mark.” 
            The state, of course, is in one of its biggest budget nightmares ever — its worst fiscal crisis since the Great Depression. It has had to deal with shortfalls of $12 billion over the last two years, and another one of $4.5 billion is on the way for next year. Like nearly every program in state government, the water resources program has taken a hit. It has lost $5 million and 20 staffers since 2007. The new assessments would prevent futher cuts.
           

            Big Increases

The specifics are still a bit hazy, and will be up to the governor and ultimately the Legislature in any case. But the report recommends a general shape for the plan. The proposal would boost the cost of water rights applications from the current fixed fee of $50, in most cases, to an amount based on the full cost of processing the application. Exactly how much that charge would be depends on the application, but it could run into the thousands of dollars.

            At the same time, Ecology recommends an annual charge for all owners of water rights and claims. There are about 170,000 water rights claims in the state, and another 50,000 certificates. The department suggests a charge that would typically range from $100 to $1,000 a year, depending on the amount of water used. The charge would be assessed on each water right, meaning that a holder of multiple water rights would face multiple charges.

            Slattery notes that some utilities own as many as 100 water rights. He said the state might consider placing some sort of a limit on the new assessments.

            The proposal does not affect the state’s 400,000 exempt wells.

            Big Backlog of Applications

            Schoesler calls the proposal an outrage. You can start with the language. The Department of Ecology calls the water rights assessment a fee, and by doing that Schoesler said it seems to be challenging a central tenet of western water law. Water is property, in the same way that a piece of land or a piece of furniture is property. People own it. Government doesn’t get a user fee.

            If state regulators want to charge an assessment on owners of water rights, that makes it a tax, he said. And then you have to ask whether the tax is justified.

            “If the program was well-run and reasonable, it might have some support,” he said. “But there is nothing to indicate that it is reasonable.” 

            Right now the department has a backlog of about 7,000 applications. Schoesler complains Ecology is slow to process, restrictive in its decisions. Moratoriums on new permits in some areas have prompted concerns that environmental politics are playing a role in the department’s decision-making. Although green groups may dispute the tenets of western water law, Schoesler, like everyone in agriculture, maintains that the law is clear.

            Tax or Fee Could be Issue

In a letter to the ag community last week, Schoesler argued that a new water assessment gives Ecology an excuse to avoid becoming more efficient. “Many state agencies have seen their budgets fall and their staffs shrink. That’s bound to continue as state government is ‘reset.’ But how many of those agencies can turn around, like Ecology is doing, and propose a brand-new source of revenue? Is that the only way the water resources program can become more self-sustaining and efficient?”

            Whether the new assessment is a tax or a fee isn’t just a matter of wording. The terminology makes a big difference in the Legislature. If Initiative 1053 passes, a two-thirds vote of the Legislature would be required in order to pass a tax increase – and that would give Republicans power to block any legislation. The call is up to House Speaker Frank Chopp and Lt. Gov. Brad Owen, the presiding officer of the Senate, each of whom would be called upon to make the decision in his respective chamber.

            A Long-Running Battle

            Exactly who is to blame for the logjam in the department is one of those arguments that has raged for years. In fact, the upcoming battle is looking like a re-run of a conflict that took place in the Legislature nearly two decades ago. You can also say that’s where the whole thing started. 

            During an early-’90s budget crunch, urban Democrats cut funding for the water program and argued that costs ought to be shifted to water users. Environmental groups lobbied by their side. Then Republicans took control of the House and battled the plan to a standstill. The result was no increase in funding from any source.

Ecology argued it couldn’t work any faster or cheaper. Shortcuts mean court battles, it says. So a backlog of 3,000 water applications at the time eventually swelled to 7,000. Some funding was finally restored in 2001, and the department is now keeping pace. About 500 new applications come in each year, and the department issues about 500 decisions. But that backlog has never shrunk.

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