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Florida seeks per-gallon water fee from bottlers

LEE — In a rural North Florida town where the water tower bears the motto "Tiny but Proud," residents have a big secret: They give the cold, clear spring water that bubbles up from the aquifer below their soil to the nation's largest bottled water company — for free.

Every day, Nestle Waters of North America sucks up an estimated 500,000 gallons from Madison Blue Springs, a limestone basin a mile north of town. It pipes the 70-degree water to its massive bottling plant and distribution center, fills 102,000 plastic containers an hour, pastes on Deer Park or Zephyrhills labels, boxes it up and ships half of it out of state.

The cost to the company for the water: a one-time $150 local water permit. Like 22 other bottled water companies in Florida, including giants Coca-Cola and Pepsi Co., Nestle's profit is 10 to 100 times the cost of each bottle.

And the payment to Florida? Not a dime.

Gov. Charlie Crist wants to change that. He is proposing a 6-cents-a-gallon state tax on water used for commercial water-bottling purposes.

"It's a resource of the state, and if you're going to withdraw it for a profit, we should charge you for that use," said Mike Sole, secretary of the Department of Environmental Resources, which has been developing the governor's proposal for the past six months.

The DEP estimates the fee would apply to about 5.4 million gallons a day — the amount it believes is pumped from state springs and aquifers by bottlers from Coca-Cola's Dasani to Publix. The estimate does not include water taken from municipal water supplies.

The so-called "severance fee'' would be phased in, producing an estimated $56 million the first year, according to the governor's office. The money would be used to finance water projects like desalination plants and other alternatives to traditional water supplies. Making the money even more attractive: The fund that currently finances those projects faces a $15 million deficit since the documentary stamp tax dedicated to water projects dried up in the real estate crash.

If the fee is passed on to consumers, the cost of a pint-sized bottle of water would increase less than a penny.

It's a major shift in position for the department, prompted by Crist, which until December had collected no data on bottled water use in Florida, and takes a hands-off approach to its regulation. The Florida Department of Agriculture's Division of Food Safety makes sure bottlers have approval from local water management districts to withdraw the water, but no state agency tests bottled water. Crist's proposal wouldn't change that.

Instead, Crist's plan would treat water like phosphate, oil or natural gas, all mined from the ground. Companies that extract those natural resources from which they profit pay fees or royalties to the state.

Nestle and other bottled water users say it is unfair to single them out from all the public and private water users that extract what the DEP estimates is 4 billion gallons of spring water from Florida's aquifers each day.

"I don't see how we're different from the agriculture users, which, just a few miles from here, have 30 irrigation pivots draining more water than we are," said Rob Fisher, who runs the Blue Springs plant and is director of operations for Nestle's southwest region.

Bottled water "isn't a luxury, it's a choice," he argues, "and during times of natural disaster, it's a necessity."

States like Vermont and Michigan already impose user fees on bottled water companies, while Massachusetts has begun debating a ban on extracting water for commercial uses and Maine is considering taxing it.

Florida's dire economy has some legislators ready to change the rules on bottled water. Sen. Evelyn Lynn, an Ormond Beach Republican, has filed a bill to impose the state's 6-cent sales tax on bottled water at the point of sale. She objects to Florida water managers restricting water use by homeowners when the state is "handing out permits for major bottling companies to bottle as much as they want," she said.

A companion bill is being pushed by Rep. Michele Rehwinkle-Vasilinda, a Tallahassee Democrat. Economists say that if the state applies the 6-cent sales tax to every bottle of water consumed in Florida, it could raise about $42 million.

Sen. Thad Altman, a Melbourne Republican who chairs the Senate Finance and Tax Committee, has launched a review of all sales tax exemptions. "It would be hard to argue that if you tax bottled water you lose Florida jobs," he said. "Does it impede competition? No. Does removing the tax put Florida business at a disadvantage? I don't think so."

Nestle's Fisher argues that water bottling is a clean industry. Nestle's employs 1,000 people statewide, its state-of-the-art plant in Madison County has been certified as the largest "green'' building operation in Florida, and the plant has won numerous productivity and job safety awards.

The plant also pays more than $650,000 in property taxes each year, proof that the state is getting something in return for the water, company officials say.

"We're an easy target," said Jim McClellan, spokesman for Nestle's Florida operations. "We're an obvious user, so people immediately think about us when they're thinking about water use."

He notes how bottled water has become essential when pipes are ruptured, there's a boil water order or a hurricane cuts off a community water source.

"It makes no sense to take the healthiest packaged beverage on the market today, subject it to an onerous tax and not apply it to any other beverage," McClellan said.

Environmentalists disagree. "Most people won't see this as an unfair tax," said Eric Draper of the Florida Audubon Society.

State Rep. Will Weatherford, a Wesley Chapel Republican whose district includes Nestle's Zephyrhills bottling plant, believes the House will be less open to imposing new taxes on bottled water than the governor and Senate. "We want to be careful not to single out any industry," he said.

Crist, who has carefully avoided being associated with any tax increases, could be spared from repercussions on this one, Draper predicts: "This will be very popular with ordinary people who do see that these companies are taking something for free and putting it in bottles and charging a lot more."

Mary Ellen Klas can be reached at meklas@miamiherald.com.

Florida seeks per-gallon water fee from bottlers 03/01/09 [Last modified: Tuesday, March 3, 2009 10:26am]
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