Board Meeting 10/07/1982

• Board Meeting Date: 10/7/1982
• Description: CWCB Meeting
• Board Meetings - Doc Type: Meeting

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~~~TERN STATES WATER COUNCIT~'
RECOMMENDATIONS
for
WESTPO Governors' Meeting
concerning
Water Project Cost Sharing

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ISSUE:

What should be the federal role in water project cost sharing?

BACKGROUND:

On June 15, Interior Secretary James Watt presented the President
with an action memo containing recommended cost sharing guidelines
from the Cabinet Council on Natural Resources and Environment,
The guidelines include recommended cost sharing percentages for
various water project purposes. Generally, non-federal financing
would be 100%, with the exception of recreation (50%) and agri-
cultural water supply, rural drainage, urban and rural flood
control (at least 35%). Operation and maintenance costs would be
the responsibility of the beneficiaries. The memo states that:
(1) non-federal cost sharing is necessary due to federal budgetary
constraints; (2) upfront contributions are preferrable, with
limited exceptions; (3) beneficiaries should pay for the cost of
services; (4) above cost pricing should be considered, and (5)
agricultural water supply and flood control purposes require more
flexible cost sharing. A more formal explication of cost sharing
principles is being prepared through the Cabinet Council, but the
Administration's final cost sharing policy is not expected to be
announced until after the elections.

DISCUSSION:

The memo to the President recognizes the significant contribution
which water development projects have made to the health and welfare
of the nation and calls for a tremendous increase in non-federal
cost sharing to meet future needs, While western states have
previously endorsed the concept of cost sharing and accept the fact
that the present federal budgetary constraints may necessitate a
reduced federal role, it appears the present Administration is
proposing to withdraw most federal financial participation without
a concurrent transfer of federal revenue sources in the face of
a clear continuing need,

The Administration has made it clear that its primary ob-
jective is economic recovery and that cost sharing policy
is seen as a tool for reducing federal expenditures. While
recognizing the urgent need to balance the federal budget, re-
ducing federal appropriations for water projects will do very
little, if anything, to solve our economic problems. In fact,
large deficits caused by income transfers and publicly supplied
consumer services have driven market interest rates to the point