Upper Colorado River Basin Fund 2007

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anticipated in the future. It appears there would be few, if any, new irrigation projects, and it is not likely that we can secure the initial federal funding in the budget for construction. This option may leave apportioned funds for states unused and could result in the elimination of the funding source if it is not used. Option 2: Modify Section 5 of the CRSP to allow funding of municipal and Industrial (M & 1) projects as well as irrigation projects. Analysis: This change would better reflect current needs for projects, and over time, there would likely be a number of new projects proposed for funding. Although necessary to meet future state needs, this change would go against the historical fact that past "subsidized" Reclamation funding nationwide has been restricted to agricultural projects. If we were successful, however, the same problems would exist as described in option 1 for obtaining federal budget approval to allow initial construction. There could be a short window of time where the economic stimulus funding to build infrastructure may help in securing budget authorization, but this is likely to be short -lived and probably over before the surplus revenues to states from the Basin Fund begin to accumulate. Because of severe and continuing federal budget constraints, it may be difficult to get Congress to make a long -term, open - ended commitment to fund M & I projects from the Basin Fund. Option 3: Modify Section 5 of the CRSP to allow funding of M &I projects as well as agricultural projects. Modify the structure of the Basin Fund to allow state apportioned revenues to be used for a defined and limited period of time to capitalize a perpetual, low interest, revolving loan fund. Analysis: These modifications would allow funding of all types of projects needed for current and future water development in the Upper Basin. However, the amount of financial assistance given would be limited to not less than a zero percent interest loan unless we built some hardship grant provisions into the statute which would erode the corpus of the fund. Enabling legislation could address this as well as varying interest rates and loan terms based upon ability to pay. Other forms of financial assistance such as credit enhancement mechanisms or municipal bond insurance could also be considered to stretch available funds. The general concept is that loans could be made, repayments made and money re- loaned again. A major feature of this alternative would be the selection of a definite and limited period of time where excess revenues from the Basin Fund apportioned to the states would be used to capitalize the revolving loan fund. A selling point to Congress could be that their promise to states to assist in Upper Basin water development would no longer be open- ended. There would be a specific date where these excess revenues would become a dedicated revenue (income) stream to the Federal Government. We would need to choose a loan capitalization period that may be politically acceptable, allow for full development of Upper Division State apportionments and which adequately capitalizes a revolving fund. T