FOR IMMEDIATE RELEASE: Wednesday, December 17, 2025
CONTACT: Christina Johnson
Tallahassee, Fla. – Today, Florida TaxWatch (FTW) released Transferring Utility Profits to a Municipality’s General Fund Increases the Risk of Undercapitalization of Water Assets and Violate Taxpayer Accountability report to analyze the current state of Florida’s publicly owned water and wastewater treatment utilities, including a review of the practice of transferring a portion of utility net revenues to a local government’s General Fund instead of reinvesting it in the system or reducing customer rates, and whether this practice results in the undercapitalization of critical water and wastewater treatment infrastructure.
Florida TaxWatch President and CEO Dominic M. Calabro said, “Setting water utility rates that incorporate recovery costs associated with standard operating expenses and debt obligations is essential to ensuring the short-term and longer-term financial stability of a utility. Once these costs are covered, however, many publicly owned utilities make transfers to the General Fund, a practice known as ‘sweeping’ ostensibly to help pay for governmental services that do not generate revenue and to help keep property taxes lower. Keeping property taxes low often means higher municipal utility rates to balance the general budget, a habitual practice that burdens utility customers with cross-subsidies and normalizes underinvestment in much-needed infrastructure maintenance. When sweeps are used in this manner, they take on the characteristics of a tax – not a service or fee and, thus, violate basic taxpayer accountability. They should be eliminated or substantially controlled.”
Florida TaxWatch Executive Vice President and General Counsel Jeff Kottkamp said, “Funding for drinking water infrastructure has not kept pace with the growing need to address aging infrastructure systems, and current funding sources do not meet the total needs. When the municipal utility sweeps utility profits to their General Fund, the customers who live outside the municipality’s boundaries have no vote in how that money is collected or spent. For those customers who do not live in that municipality, this is seen as taxation without representation, as they have no vote on how that money is collected or spent.”
The state currently has more than 1,600 drinking water systems; of which, 449 systems are publicly owned utilities and 934 are privately owned. Although publicly owned drinking water systems account for less than one-third of all drinking water systems in the state, they are responsible for providing clean drinking water to more than 18.1 million people, or 86 percent of Florida’s population.
To help ensure drinking and wastewater infrastructure is adequately maintained, and that future demands for water and wastewater service are met, Florida TaxWatch offers the following for consideration by the Florida legislature:
- Introduce legislation like HB 653 (2020) that will require revenue collected by utilities (both government-owned and private-owned) to be utilized only for the benefit of that utility’s operations and infrastructure. This practice is already a requirement for utilities regulated by the Florida Public Service Commission but is not standard practice for non-regulated and government-owned water and wastewater system operators.
- Adjusting purchase accounting to recognize a utility’s full market value is a fundamental aspect of a functional business environment. Establishing rules to recognize a Fair Market Value (FMV) basis for purchase price accounting could pave the way for more consistent investment in Florida’s water and sewer infrastructure. FMV laws allow private companies to offer municipalities fair market value for their utility, as determined by an unbiased appraiser.
- Provide stable mechanisms for capital expenditure (Capex) recovery: Allow regulated utilities to make capital outlays for needed investments and receive timely cost recovery through surcharges, which allows for steady rate increases, rather than rate shocks.
- Keep detailed records to support the rationale for transferring funds from a water and sewer system to the General Fund. Utility revenue must be used for expenses with a direct nexus to the utility system or from funds surplus to the needs of the system.
- Encourage consolidation and regionalization of smaller water and wastewater utilities. This is a proven approach around the country to address the industry’s infrastructure issues, provide economies of scale, improve consistency of service, and reduce non-transparent public subsidies.
- Require government-owned utilities to provide the state government with standardized annual financial reports, include all transfer payments and outstanding debt, would provide a platform for comparison of payment tracking across multiple utilities within the state.
- Introduce utility accountability standards to ensure that all utilities, regardless of ownership type, maintain effective operational and technical practices to protect customers and water utility systems. Consumer protection for this vital public good should be consistently applied; not a patchwork of requirements depending on type of utility ownership.
For detailed information on the report please click here.
About Florida TaxWatch
As an independent, nonpartisan, nonprofit government watchdog and taxpayer research institute, and the trusted “eyes and ears” of Florida taxpayers for more than 45 years, Florida TaxWatch (FTW) works to improve the productivity and accountability of Florida government. Its research recommends productivity enhancements and explains the statewide impact of fiscal and economic policies and practices on taxpayers and businesses. FTW is supported by its membership via voluntary, tax-deductible donations and private grants. Donations provide a solid, lasting foundation that has enabled FTW to bring about a more effective, responsive government that is more accountable to, and productive for, the taxpayers it has served since 1979. For more information, please visit www.floridataxwatch.org.
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