Bayou Meto water district says assessment, tax credit needed for irrigation project

An irrigation project that would bring surface water from the Arkansas River to farms in four counties won’t be completed for 100 years under the current funding structure, so the district that manages it wants to increase assessments on landowners – including Bill Gates – that would be partially offset by a legislatively-approved tax credit.

Edward Swaim, the Bayou Meto Water Management District’s executive director, and board president Laudies Brantley Jr. explained the situation to a joint meeting of the Arkansas House and Senate Agriculture, Forestry and Economic Development Committees on Monday (Aug. 17).

Swaim told legislators that 80% of the water used in Arkansas is for row crop irrigation and 85% of that comes from the ground, but unfortunately those resources are being expended. In areas south of Lonoke and Carlisle, water reserves in the upper Alluvial aquifer have fallen to 10% saturated thickness. The dwindling reserves have led some farmers to drill deeper into the lower Sparta aquifer, which is a source for drinking and industrial uses. It’s depleting also.

Formed in 1991 by the Lonoke County Circuit Court, the Bayou Meto Water Management District seeks to divert surface water from the Arkansas River to reduce farmers’ reliance on groundwater.

The project’s total cost is $762 million, of which $495.3 million would come from the federal government and $266.7 million would come from state and other sources. So far, the project has spent $168 million.

Two pumping plants were constructed using federal stimulus money, but by 2017 they had been idle for three years. It could take 100 years to finish constructing the distribution system using current Corps of Engineers funding, so that year the Arkansas Natural Resources Commission and the Bayou Meto board agreed to create a viable plan to lower the project’s costs and complete the project.

The district hired the Garver engineering firm to create that plan, which divided the project into five construction phases. The first phase would serve 90,000 acres in mainly Lonoke County and also Jefferson, Prairie and Arkansas counties.

The first phase would cost $174 million, with $71 million of that coming from the Corps of Engineers and $28 million coming from the state. The rest would have to come from the district itself.

The state insisted the district could not finance its debt by water sales contracts because it wanted a more stable source of income. Instead, the district hopes to borrow the money and pay back the loan with assessments of $42 per acre on cropland owners. That amount could be reduced to $30 per acre with an existing water conservation tax credit program. Farmers would also pay a fee of $18 per acre foot for operation and maintenance. In the end, farmers would be paying $48 per acre foot, if the tax credit were created, plus more if they use more water.

An acre foot is the amount of water required to cover an acre one foot deep. Swaim said in an interview that rice usually requires 30-36 inches of water. Corn is less, followed by cotton and soybeans.

The Bayou Meto district is one of the regional water distribution districts created by the Legislature to build big water projects. The law allows the district to levy an assessment against cropland landowners, subject to approval by the Lonoke County Circuit Court. All cropland landowners would be subject to the assessment. The project needs a stable source of income, and they would benefit from the water and drainage project, even if they choose not to use the water.

Farmers currently pay a maximum of $5 per acre set in the early 2000s, but the average amount is $1 an acre, Swaim said.

He said the water district is home to hundreds of landowners and fewer than 10 very large farms, including “a ton of farmland out in east Arkansas” owned by Bill and Melinda Gates through their corporation, Mt. Magazine, LLC. There are many medium-sized farms.

The increased assessment would allow the district to borrow the money to deliver water to more than 90,000 acres within six or seven years. The money would not be collected until the first year water is delivered.

The state has available $100 million dollars in general obligation bond money for this irrigation project and another one by the Grand Prairie Water Management District. That amount would not nearly cover the costs of completing either project.

Legislators seemed supportive of the need for the project but questioned its mechanics. Sen. Jonathan Dismang, R-Beebe, said no part of the funding system is based on usage. Swaim said the state believed that would entail too much risk for the state because some farmers might choose to continue to drain the aquifers. Afterwards, Rep. Joe Jett, R-Success, said in an interview that only giving the tax credit to farmers in that part of the state would be unfair to farmers elsewhere.

Meanwhile, former Rep. Bill Bevis, a landowner from Lonoke, said he had long supported the project and helped obtain financing for it while in the Legislature, but $42 an acre would cut his rental income in half. He said all the landowners with whom he had spoken opposed that amount.

He predicted that “when these tax bills hit the mailboxes of these landowners, there will be an explosion that you can hear all the way up here at the Capitol.”

The Bayou Meto district’s presentation was followed by one from the Grand Prairie Water Management District, where farmer and board president Dan Hooks from Sloan described the need to irrigate from the White River, and the need for support by state legislators. About $200 million worth of work has been completed, including a $55 million pump station and some piping.

Hooks said there are 300,000 acres within the area, and 250,000 are intensely farmed and irrigated for rice, soybean and corn crops.

“Today our way of life is not sustainable without the water,” he said. “We are water rich. The water is not in the right place at the right time. It passes down the river – in our case, the White River – and goes to the Gulf of Mexico.”