February 20th, 2017

In October of 2014, we declared the Western Area Water Supply (WAWS) to be "too big to fail".

Last week, the House Appropriations Committee decided to make it official policy that WAWS is too big to fail.

In a set of amendments to House Bill 1020 (the Water Commission bill), a provision was created that will require the State Water Commission to pay loans on behalf of WAWS if WAWS does not have the money to do so themselves.

As those who have followed this issue know, we have long been critical of this project due to the fact it represents a socialistic attack on private business in the way it was supposed to be funded by industrial water sales.

This bailout provision is proof that the state needs to find a way out of the industrial water business.

In 2013, there was an effort in the House to create a Water Extraction Tax targeting private industrial water producers.

There was considerable push-back on that issue.

From the Bismarck Tribune Editorial Board in 2013:

Water is an essential resource in semi-arid North Dakota. An extraction tax on water from aquifers for industrial use needs to be reviewed within the context of the state overall water polices. It also must be seen within the context of the state’s energy and economic development policies. Further, it must be weighed in view of a desire to reduce taxes in general.

We need not tax water just because we can.

Now, that idea has reared its head again and is included in amendment approved by the House Appropriations Committee for HB 1020:

For the House Appropriations Committee to bring back the idea of a Water Tax (calling it a royalty now) and to write into state law a way for there to be a permanent bailout provision with the Water Commission, the finances of WAWS have to be pretty lousy, and they are.

On Loan # 1, there have been 11 out of the last 18 months where WAWS simply paid nothing on the principal of the loan; and 2 more months where less than the "full payment" was made.

On Loan #2, all but 1 month were paid.

But through the wonders of fuzzy government accounting, WAWS booked those missed payments not as "defaulted debt" but as something called a "deferred expense asset".

This would be like if you stop paying your credit cards, let them default, and then call the cash you saved by not paying your bills an "asset".

This is house government financing works.

It would be hilarious if it wasn't the public's money.

The North Dakota House of Representative should reject this new tax on water and the bailout provision. The Water Commission budget is not the right vehicle for this sort of policy.

-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network