Monterey County elected officials tackle water, cannabis tax

SALINAS — Monterey County officials on Tuesday made several key decisions that could affect everything from area water supplies to helping a struggling cannabis industry, all the while juggling a spending plan that will likely see darker times ahead.

The Monterey County Board of Supervisors gave the green light to allowing private ownership of desalination projects and took a step toward allowing errant cannabis producers to catch up on owed taxes — itself a problem as officials are counting on that revenue to shore up a budget that was also passed Tuesday.

The fight over private ownership of desal projects dates back years and was the impetus for grass-root efforts like Public Water Now that strive to take water supplies out of the hands of for-profit merchants like California American Water Co.

But supporters of private ownership say that restricting any cache of water to only public agencies narrows the sources of supplies available to county residents. An example often touted by supporters is seawater intrusion into agricultural wells.

Now, with the ending of the prohibition on private desal projects, growers, who have been over-pumping from Salinas Valley aquifers for decades — a key cause of seawater intrusion — can install desal equipment on their wells to remove brackish water before irrigation.

County agriculture officials like Norm Groot, the executive director of the Monterey County Farm Bureau, and Joe Desmond, the executive director of Sustainable Ag and Energy, say allowing private ownership of desal projects is necessary in order to provide more solutions to water supplies, particularly as the state enters another devastating drought.

Creating any desal project will face a bevy of regulatory challenges both on a county and state level. Cal Am’s desal project application was deemed incomplete by the California Coastal Commission because of environmental concerns.

Public water advocates aren’t the only ones who decried ending the prohibition. Salinas-based Ag Land Trust, a nonprofit whose mission is to preserve ag land, filed a letter back in April throwing its support behind a publicly owned desal project.

“The Ag Land Trust supports the existing ordinance (prohibiting private ownership) and also supports the development of a publicly owned, regional desalination plant that will make inexpensive water available to farmers, residents and landowners around the Monterey Bay region,” the letter states.

Supervisors voted 4-1 to end the prohibition, with Supervisor Wendy Root Askew casting the lone “no” vote.

In a different matter, supervisors directed county cannabis program staff to come back in a couple of weeks with a plan to provide some sort of payment options for owed taxes. Many growers have hit on hard economic times as a glut of cannabis supply and other factors have sent prices plummeting throughout the state.

As a result, 24 cannabis operations in the county have shut down since 2019, according to program staff. But that hasn’t deterred would-be growers from entering the market. In that same time period, two new applications for cannabis licenses have been filed with 10 more in the queue, said Joann Iwamoto, the county’s cannabis program manager.

But the delinquencies are building. There are now more than $2 million worth of delinquent taxes, according to county data. The falling prices, and in some cases business mistakes, have resulted in some growers overextending debt, either to begin an operation or expand an existing one.

John Louie, a grower with Green Valley Floral, told supervisors Tuesday that he and his family are shutting down their cannabis operation this summer and returning solely to their rose business.

“Over-taxation stifled our business,” he said.

Cannabis has a significant impact on the county economy. Last year’s cultivation tax revenue for the county is estimated at just a little more than $19 million. Total production and value for cannabis cultivation during 2020 was calculated at $484.1 million, according to the 2020 Monterey County Ag Report, an increase of $34.4 million from 2019.

And many county services have become, to one degree or another, dependent on that tax revenue. Kevin Kamnikar, a division chief for the Monterey Regional Fire District, threw his support behind a payment plan for growers, since revenue from cannabis tax is a key source of revenue for the district.

“I urge you to support a payment plan,” he told supervisors.

And finally, supervisors passed the fiscal year 2022-23 spending plan, a $1.8 billion budget that is an increase of $168.9 million over the current year budget. County Administrative Officer Charles McKee puts expenditures at about $839 million compared to revenues of $786 million, a shortfall of $53 million.

A part of that red ink is being made up by one-time infusions from contingency funds and the American Rescue Plan Act of 2021, which provided $350 billion to help states, counties, cities and tribal governments cover increased expenditures, replenish lost revenue and mitigate economic harm from the COVID-19 pandemic.

But Supervisor Luis Alejo, the budget committee chair, has cautioned that there will be some necessary belt-tightening in the near future, as funding from the act is required to be spent by Dec. 31, 2024. By that time the county will have spent an estimated $84.3 million in federal funding from the act, according to a 2021 county report.

After that, the county will be back to spending plans more closely resembling revenue sources that are not one-time.

Contributed by local news sources

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