There’s an aspect of the current debate about desalination in Corpus Christi I think needs more consideration. That aspect is taxpayer-funded subsidies.
Tons of taxpayer dollars are spent on subsidies for business and industry. Let me give you some examples. Multiple sources estimate the U.S. government spends between $10 billion and $52 billion per year on direct and indirect subsidies for fossil fuel industries. I won’t go into the other industries in our economy receiving federal subsidies, but what is spent on the fossil fuel industry alone illustrates my point.
Then the state of Texas spends millions, perhaps billions, of taxpayer dollars per year through all kinds of subsidy and incentive programs. Among those are the Texas Enterprise Fund,
the Texas Enterprise Zone Fund, the Skills Development Fund, Chapter 312 agreements and so on. And then cities and counties in Texas come in with even more subsidy and incentive programs. There are things like Chapter 380 and 381 agreements, various reinvestment zone schemes and industrial district agreements to name a few. All of those programs are taxpayer funded and provide either direct cash incentives or indirect subsidies in the form of tax abatement, infrastructure improvement or removal of industrial property from property tax rolls.
In total, billions of taxpayer dollars are spent each year at the federal, state and local levels as subsidies for industry.
Which brings me to the Corpus Christi issue of desalination. The figure of $1 billion has been thrown around as the cost of constructing the Inner Harbor desalination plant. I assume the city would issue bonds to pay for such a costly facility, so some or all of that cost would wind up on residential property tax bills. But at the water information meetings held across the community over that past several months, it was suggested that 60% to 80% of the water produced by the city is used by large-volume customers while residential consumers account for about 20% of water consumption. So if residential property taxpayers get saddled with the debt for a desalination plant that mostly benefits industry, how is that anything other than another local taxpayer-provided subsidy of industry?
I’m sure this question will generate all kinds of blowback from desalination proponents. I expect they’ll say many of the incentives are performance based, that properties taken off the property tax rolls are subject to payments in lieu of taxes, that industry provides its own fire protection, or that industry pays special fees for water projects. But there’s more to it than that. Many of the performance commitments (jobs, rate of pay) often don’t materialize after the projects begin and incentives are provided; some even go bankrupt and close. Determining the proportionality of industrial property valuations and resulting payments in lieu of taxes is often opaque and locked behind nondisclosure agreements. Yes, industry may provide fire protection for some incentivized properties, but not all incentivized properties are covered by those fire protection services; and, doesn’t the Corpus Christi Police Department, Corpus Christi Fire Department and EMS still respond via mutual aid agreements to some of those industrial properties? And, yes, industry may be paying special fees for water projects, but the agreement with the city then exempts those properties from drought surcharges. My point is there is another side to the story of "nothing but benefits" deriving from taxpayer funded incentives.
At the same time cites and counties struggle to provide budgetary support for their functions. Annual reports filed by the city’s Library Board have noted the chronic underfunding of the library when compared to those in similarly-sized cities in Texas. A couple years ago there was talk of closing the Oso Wetlands Preserve, only to have it receive reprieve through a recent grant from another organization. Of course, there’s the chronic issue of the condition streets. More recently, there have been suggestions to cut positions from the city’s code compliance and parking enforcement.
My point is fairly straightforward. Tons of taxpayer dollars are spent on industry subsidies and incentives, whether at the federal, state or local level. And now if Corpus Christi residential property taxpayers are going to be asked to assume a billion dollars in long-term debt to pay for a desalination plant that will primarily benefit industry, isn’t it time to ask when enough is enough? We certainly need to have that conversation when it comes to residential property taxpayers being asked to possibly carry 100% of the debt load for a desalination plant when they will get only 20% of the output.
Tom Krepel is a retired educator and has served on the Corpus Christi Library Board.
This article originally appeared on Corpus Christi Caller Times: Taxpayers would be assuming long-term debt for desalination | Opinion
