Our Klamath Basin Water Crisis
Upholding rural Americans' rights to grow food,
own property, and caretake our wildlife and natural resources.
FEBRUARY 03, 2006 California Farm Bureau
With a strong team effort from virtually all of the state’s agricultural organizations, AB 674 (Klehs) was defeated in
the Assembly on a vote of 29 to 37. The measure was sponsored by the California Independent Oil Marketers
Association (CIOMA) and would have required farmers and ranchers to pay the state’s highway tax on diesel fuel
even though it is used exclusively off-road. We understand that this may not be a top priority issue for some
farmers because they have already moved to a duel tank system so they can utilized red-dyed diesel exclusively offroad,
but at least 30 percent of the off-road diesel users will have to continue to purchase clear diesel for some of
their off-road uses. We will continue to work with CIOMA to develop a more equitable method for the collection of
the state’s excise tax so it will only be due on the amount of fuel actually used on the road.
Our Farm Team members responded to our action request on AB 674 by generating 113 letters to key members of
the Assembly. Please note the roll call below and consider sending a thank you note to (or calling) your
representative who either voted “NO” or did not vote at all. Remember, not voting is just as good as a “NO” when
you’re opposed to a bill.
AYES: Bass, Berg, Bermudez, Chan Chavez, Chu, Daucher, Dymally, Goldberg, Hancock, Haynes, Jones,
Karnette, Klehs, Koretz, Laird, Leno, Levine, Lieber, Mountjoy, Mullin, Nation, Oropeza, Pavley, Ridley-Thomas,
Saldana, Spitzer, Walters, Nunez.
NOES: Aghazarian, Arambula, Baca, Benoit, Blakeslee, Bogh, Calderon, Cogdill, Coto, Emmerson, Garcia,
Harman, Jerome Horton, Shirley Horton, Houston, Huff, Keene, La Malfa, La Suer, Leslie, Matthews, Maze,
McCarthy, Montanez, Nakanishi, Nava, Negrete McLeod, Parra, Plescia, Sharon Runner, Strickland, Torrico, Tran,
Umberg, Villines, Wyland, Yee.
NOT VOTING: Canciamilla, Cohn, De La Torre, DeVore, Evans, Frommer, Lieu, Liu, Niello, Richman, Ruskin,
Salinas, Vargas, Wolk.
Doug LaMalfa also deserves a special thanks for his tireless work to defeat this measure. As a farmer, he strongly
defended off-road clear diesel users and countered Assemblymember Klehs’ repeated allegations that 50 to 60
percent of farmers and ranchers use tax exempt clear diesel on the road and are “tax cheats.” He also was
instrumental in getting the Republican Caucus to take an opposed position on the bill. We are also grateful for the
hard work of former CFBF staffer Louie Brown and the Wine Institute’s Eric Stein who both worked diligently to
kill this unfair bill.
At $5 Billion, That’s One Big ‘Fee’
he Department of Water Resources (DWR) has included a new statewide water tax in the Governor’s water supply
and flood protection bond proposal. Farm Bureau has several significant concerns about this new tax, including the
fact that the Department is trying to advance this new government charge as a fee instead of as a tax in order to fit
within the Governor’s commitment not to raise taxes in order to finance his visionary infrastructure bond plan.
Whether it is called a tax, a fee, a donation, or a donut, it is still a new charge that every water district customer in
the state; urban and agricultural, will pay.
ere is how it works: Each water district will be assessed a ‘capacity charge’ based upon the number and type of
service connections they provide. Districts will pay $3/month per single-family connection, $5/month per
commercial connection, and $10/month per multi-family or industrial connection.1 Agricultural connections will
be taxed as follows:
$3/month per connection serving less than 10 acres
$6/month per connection serving 10-179 acres
$10/month per connection serving 180 or more acres
ach retail water district will pay this new tax, and will be allowed to recover it from customers.
If a farmer has multiple service points where district water is delivered to the fields, a connection charge will apply
for each one. In addition, the charge applies monthly, whether water is actually delivered in that month or not, and
will apparently apply to connections that do not even regularly receive water every year. Farmers should be able to
use the above rules to calculate what they will have to pay their districts for this new tax.
he DWR estimates that this new tax will raise initially $380 million annually, and with urban growth, this will rise
yearly. The Department projects collecting and spending $5 billion with this new tax over the next decade.
wo-thirds of this money will be distributed back as block grants to regional water planning agencies (not
necessarily to the districts that paid it) within the region from which the tax was collected, and the remaining third
(more than $125 million annually) will be spent by the DWR for various purposes.
It does not appear, absent the unlikely consent of the legislature, that much if any of this money will be spent on
significant new statewide water supplies that will ease urban or environmental conflicts with agricultural water
dministration officials have also said that there are no plans to use any of this new revenue to fund existing water
programs that have lost general fund support, and have been transferred to user charges or simply deferred (such as
watermaster and dam safety fees, water rights and water quality fees, or flood channel maintenance).
hese new taxes will significantly increase many farmers’ annual tax burden, on top of hundreds of dollars in new
water related fees over the past few years. Additionally, there is already significant pressure in the legislature to
replace the per-connection proposal with a per-acre-foot charge, which would increase the burden on family
farmers even more dramatically.
he Department has rightly pointed out that the State’s need for new water supplies will be to meet growing urban
demand, and that agricultural water use is actually projected to decrease in the next two decades under the newly
released 2005 State Water Plan. On this basis, and assuming that some new tax will be assessed, it is proper to
assess a connection charge rather than a volume charge.
owever, Farm Bureau fundamentally questions the wisdom of any new tax to pay for basic infrastructure like
water service, which should be paid for out of general tax revenues that all of California’s citizens, town or county,
are already heavily paying. All Californians, both urban residential customers and farmers in rural areas, should be
wary of new taxes of this magnitude being portrayed as mere ‘fees’ and of being forced to pay additional money
over and above our sales, income, and property taxes we all already pay in abundance, for support of basic
1 No charge will be assessed for lifeline connections (a discounted rate many districts make available to the poor and those on
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