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The Central Utah Project, a $2 billion to $3 billion construction project designed to channel Uintah Basin water west to the Wasatch Front and central Utah, will bump up future water rates as well as property taxes, a Utah Foundation report said.

Because of other factors that influence water prices - such as population growth, savings through conservation and costs of complying with safe drinking water laws - it is difficult to pinpoint the precise effect the CUP will have on water rates in areas it will serve. The CUP supplies water to 11 counties, including Salt Lake, Utah, Juab, Wasatch, Summit and Duchesne."About the only thing that seems sure at this point is that water rates are going up," the report said.

But the foundation supports the idea of having more of the CUP costs covered by water rates rather than general tax revenues. Property and sales taxes don't encourage wise use of water, the report said, because those (revenue) sources don't reflect water's true cost.

Placing a greater share of the cost on water prices would more directly encourage water conservation and cut the general tax subsidy going to the CUP, the foundation said.

But the report noted that if Utah's $300 million to $500 million burden to complete the CUP were covered entirely by water rates, "many homes would see $200 water bills during the summer months," the report said.

That's not something water agencies want to impose, the report said. So, much of the local spending for the CUP will continue to come from property taxes paid by residents in the 11-county Central Utah Water Conservancy District, where 70 percent of the state's population lives.

The district is holding hearings in nine of those counties on a proposed tax increase that would add $1 million to the district's $12 million annual property tax revenue.

And the foundation expects the district to petition the Legislature before the decade is out to increase its maximum levy on property in the district to help cover the cost of completing the project. That was attempted two years ago, but Gov. Mike Leavitt headed it off by convening a task force that would look at all funding options.

The task force didn't rule out a future tax increase, but it recommended delaying the decision until feasibility studies are completed on the CUP components left to complete.

Other funding will likely come from issuing bonds, state water loan funds, and a small portion - one-eighth of one cent or $25 million annually - of general sales tax revenue, which the Legislature authorized be funneled into a special water development fund.

A full-page chart in the report illustrated the dramatic escalation in costs to complete the CUP. The project was initially estimated to cost $330 million and the first appropriation was made in 1965 for $14.8 million. By the year 2003, appropriations will total $2.1 billion with the state and the district covering more than $400 million.