Congressman Cory Gardner (R-CO) has introduced a bill that would make it easier for mutual ditch and irrigation companies to do business by reforming an outdated provision in the tax code. This change will help farmers and ranchers retain stock in these companies and result in better maintained water infrastructure.
"Under current law, it has become cost prohibitive for farmers and ranchers to hold stock in mutual ditch and irrigation companies, resulting in the sale to non-agricultural users," Gardner said. "This is a growing problem for the agricultural community and something that can be easily fixed. It is critical that we keep this water available for farmers that cultivate irrigated land. In doing so, we prevent the buy and dry up of farm land and protect jobs in agriculture."
Currently, mutual ditch and irrigation companies must receive 85 percent of their income from shareholder investment in order to maintain its non-profit status. The Water and Agriculture Technology Economic Revitalization (WATER) Act allows mutual ditch and irrigation companies to receive other sources of income for operations and maintenance and still maintain their non-profit status. This legislation requires that the extra revenue be used exclusively for operations and maintenance of the ditch and irrigation company.
For example, if an irrigation company incurs a large capitol expense, such as replacing a dam that is in disrepair. The irrigation company is currently faced with the decision to either try to collect revenue to fix the dam from shareholders, which is difficult, or borrow large amounts of money. This legislation allows the irrigation company to generate other streams of revenue from either crossing fees or the exchange of water rights that exceeds 15 percent (because it comes from a non-shareholder source), while still maintaining their non-profit status. This would improve infrastructure and allow water to continue to flow to farmers and ranchers in need.