The exercise of the powers granted by this chapter will be in all respects for the benefit of the people of the state, for the increase of their commerce, welfare, and prosperity, and for the improvement of their health and living conditions, and will constitute the performance of an essential government function, and neither the water resources board nor any municipal water agency, or department, or special water district to whom the water resources board has leased any of its properties or other facilities, shall or may be required to pay taxes or assessments upon or in respect of those properties or facilities acquired, leased, or used by the water resources board under the provisions of this chapter, or upon any improvements constructed on property owned by the board by any municipal water agency, or department, or special water district, or upon the income therefrom; provided, however, the general assembly may direct payments in lieu of taxes to be paid to a city or town in which those properties or facilities are located.