According to allocative efficiency criteria, water in the American West is often underpriced in urban sales. The political-economic process that motivates municipal managers to impose the resulting deadweight losses on their constituencies is analyzed with a median voter model of choice between alternative municipal revenue sources. The implications of this model are tested empirically, and the results confirm the conclusions of previous empirical research by suggesting that cities with more skewed income distributions tend to engage in more redistributive activities than other conditionally similar communities.