Commentary - May 2010

Clean Water, Dirty Politics

Another Legislative Money Grab

by Lyle E. Brennan

    When the Nevada Legislature met in special session in February to plug the $800 million hole in the state’s budget, lawmakers were desperate to “find” enough money to fund state programs.  Unfortunately, the Legislature’s creative accounting solutions included a blatant misappropriation of $62 million that wasn’t theirs.  This was money that had been collected by the Clean Water Coalition (CWC) to fund wastewater treatment in Southern Nevada.

    The CWC was created in 2002 to oversee construction of an $860 million pipeline to transport treated wastewater to the bottom of Lake Mead.  The CWC collected funds for this project from developers, as well as commercial and private water users.  A typical household in Southern Nevada pays about $8 annually into this fund.  Large commercial projects like the M Resort, which opened in 2008, paid connection fees as high as $1 million.  

    In December 2009, the CWC received a report that the Lake Mead project might not be necessary after all, due to improvements in water treatment technology and a slowdown in Southern Nevada’s population growth.  The CWC then had two choices: they could use the money they had collected to fund other projects, such as capital improvements at wastewater treatment plants or improving conditions in the Las Vegas Wash.  Or, they could refund the money to the people who had contributed it, since it wasn’t going to be used for the purpose that justified the original fee assessments.  At its December meeting, the Coalition voted to wait until 2012 to decide, while they conducted more research.

    By January of this year, the CWC fund had grown to more than $62 million, and it was this money that Assembly Bill 6 seized to put into the state’s general fund.  The CWC filed suit, claiming that the funds would be unlawfully converted from fees to taxes.  The difference between a fee and a tax was pointed out in a second suit brought by M Resort LLC, which noted, “A tax is a generalized assessment which funds generalized functions beneficial to all, while fees are specific assessments designed to pay for specific functions benefiting those who pay the fee.  The legislation at issue discards the distinction and converts fees paid by a subset of Nevadans into a de facto tax.”  Developers, like the owners of the M Resort, contributed money specifically for the purpose of treating wastewater in Southern Nevada, but their money is now being used to fund education, social services, interest payments, and other state expenses.  In effect, the water treatment fees were converted into a tax that supports the debts and obligations of the state government.

    The M Resort’s complaint also notes that the Fifth Amendment to the U.S. Constitution prohibits the taking of private property for public use without just compensation.  The private property (money) paid into the CWC fund was taken by the state without compensation.  This not only affects large companies that were assessed million-dollar fees, but also smaller companies, school districts and other public entities, as well as the thousands of Clark County households that have paid into the fund.  

    It would be painful for the state to lose this $62 million and be forced to balance the budget again, but no matter how much it hurts, this money should be returned to the Clean Water Coalition.  They can then use it to ensure clean Southern Nevada water, or refund it to the people who paid their fees in good faith.  To do otherwise is unfair, unjust and unconstitutional.  

    If you want to show your support for this issue, please contact Chip Maxfield, general manager of the CWC, or any member of the board, which is composed of local government representatives.  Contact information can be found on the CWC website: www.cleanwatercoalition.com.

Lyle E. Brennan Publisher
COMMENTS? email: lyle@nbj.com