Viewpoint: Proposed water tax needs legislative

Dian C. Taylor
Guest Columnist

Artesian Water Co., which began serving customers in Delaware over 110 years ago, is the largest regulated water utility in the state of Delaware, serving over 300,000 people throughout all three counties. At Artesian, we have always been passionate about protection and preservation of water resources. Today that includes utilization of wastewater treatment and disposal methods that benefit agriculture, preserve open space and recharge aquifers.

The company is regularly involved in the development of water and wastewater policy and legislation affecting its customers.

Artesian opposes House Bill No. 270 – Clean Water for Delaware Act, which the company believes establishes a dangerous precedent for how infrastructure would be funded in Delaware. This bill creates a significant new dedicated tax (called a surcharge) on Delaware citizens and undermines the Delaware General Assembly’s oversight of infrastructure projects by placing control of those projects with the Board of Directors of a newly created Trust that acts solely on the recommendations of an advisory council outside of the General Assembly’s control.

The legislation creates a tax on resident and nonresident taxpayers in an amount equal to 10 percent of their net income tax liability up to $80 in the case of individuals filing a joint return or $40 in the case of all other individuals. This money is directed to a special fund to finance programs, activities, and projects regarding water supply, water quality, wastewater treatment, flood protection and the like.

Under the legislation, the body charged with developing these programs — as well as the sole source of recommendations for infrastructure projects to be funded by the tax — is a 13-person Water Infrastructure Advisory Council (WIAC), which makes recommendations to the Delaware Clean Water Trust composed of various cabinet secretaries, an appointed director and serviced by a trust administrator who is housed within the Delaware Department of Natural Resources & Environmental Control (DNREC).

Under the proposal, a new dedicated tax is placed on Delaware citizens and used by the trust — administered through DNREC — to fund only projects and programs recommended by WIAC — all without any hands-on involvement or voting control of the Delaware General Assembly. It is our understanding that the WIAC has access to $100 million, which DNREC controls, and last year used $7 million with a $1.4 million bond bill match, along with $38 million of its own funds, of which $8 million to $9 million was used last year with a $1.6 million bond bill match. These fund balances appear to belie the need for an additional dedicated tax on Delaware’s citizens.

While advocates for HB 270 may contend that reports are required to be filed annually by the trust with the General Assembly and that under HB 270 the General Assembly is knowingly creating this process delegating decisions to “experts” in the area, they cannot ignore that the bill collects significant monies annually through a separate tax, places that money in a special, dedicated fund and allows for a small number of less than two dozen unelected individuals to recommend projects and to distribute or loan those funds as they deem fit.

At a time when Delaware continues to face significant financial challenges, it is unwarranted for any new surcharge, in reality a tax, to be put in place especially with funds limited to use for only certain dedicated purposes. These dedicated revenues not only limit the ability of the current Governor and legislature to factor these water infrastructure needs into the overall state budget priority, but they tie the hands of future governors and legislators to do so.

Artesian opposes HB 270 as it creates a special water tax on Delaware citizens and a special fund controlled by a handful of unelected officials and is not an appropriate solution to water quality and infrastructure challenges faced by the state.


Dian Taylor is president and CEO of Artesian Resources.

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