This story involves two of the things I enjoy most in life: wine and seeing Democrats get what they vote for, good and hard. Unfortunately, it's the winemakers — and out-of-state wine-enjoyers like Yours Truly — paying the price for a new groundwater tax on winemakers who don't even abuse the groundwater supply.
Wait, wut?
California's Sustainable Groundwater Management Act (SGMA) passed the Democrat-dominated Assembly in 2014 and was signed into law by then-Gov. Jerry Brown. Under the SGMA, late last year, the Napa County Groundwater Sustainability Agency imposed a $99-per-irrigated-acre flat tax, regardless of any actual groundwater use.
"It comes as the region," the New York Post reported this weekend, "is already in crisis mode over plummeting profits, fewer tourists, changing drinking habits and wildfires wiping out farmland."
Locals argue that:
- Napa’s groundwater isn’t in crisis like the Central Valley.
- They’re being charged regardless of responsible water management.
- The fee is based on acreage rather than on any over-pumping.
- It’s another regulatory cost piled on top of the state's notorious labor, environmental, and tax burdens.
“Right now we’re looking at these extra costs at a time where all of our clients are asking for price reductions and less fruit due to the downturn in the market,” Jim Lincoln, general manager of Beckstoffer Vineyards, told the paper. His company grows grapes for 120 different winemakers.
“We’re not making a profit right now. Labor’s going up and every client that we have has asked us for a price cut. Costs are going up, prices are going down… see where this ends,” he added. Sacramento doesn't really care where it ends, so long as the state gets its $99-an-acre along the way. California long ago adopted the GoodFellas approach to tax collection: "Eff you, pay me."
I don't doubt that Gov. Gavin Newsom's PlumpJack Collection of wineries and restaurants will do just fine, as well-established as they are. And, of course, whatever favorable treatment (cough, cough) Newsom might wring out of the state government he runs.
It's the small wineries — you know, the upstart competition — that will suffer the most under the new tax.
Napa's vineyard tax is what happens when a state refuses to increase water supply and instead chooses to manage government-created scarcity through regulation and taxes that either get passed on to consumers or drive producers out of business.
The funny part (if your sense of humor runs toward cruelty) is that the tax is part of the state's sustainable water initiative. To understand why that's so funny, you first have to understand that the thing about California under one-party rule is that the people don't always get what they vote for.
Two weeks ago, I wrote a column looking into how the Newsoms used public office to further enrich themselves, but what stood out most was Gov. Newsom's complete (and illegal) disdain for California voters.
At least, that was my conclusion after reading a Victor Davis Hanson article, wondering if California was "reaching critical mass," thanks to one-party rule creating a "neo-feudal society" that is "hardly democratic." VDH's most egregious example was the fate of 2014's Proposition 1, a $7.12 billion water bond "designed to solve the state’s chronic water storage deficit."
Even though Prop 1 included "$2.7 billion specifically designated for new reservoirs," an alliance of bureaucracies, elected officials, and green activists still managed to block any new reservoir construction.
"Adding insult to injury," Hanson continued, "Governor Gavin Newsom instead used $250 million from the Proposition 1 fund to blow up four dams on the Klamath River."
California has — or rather had — impressive water infrastructure for a state of 25 million people or so, which is when Sacramento basically stopped building new dams and reservoirs. Now the state has nearly 40 million people, including roughly 11 million people crowded into the semi-arid Los Angeles Basin.
What California needs is a couple of new nuclear reactors running desalination plants 24/7 and pumping the water where it's needed, particularly to the state's struggling agricultural regions. What California got is an all-too-brief five-year extension on its only nuclear plant (until 2030), and tearing out existing infrastructure.
Oh, and increased production costs on Napa's struggling winemakers.
I'd raise a glass of Napa Cabernet and wish them luck, but I'm not sure I can afford it.
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