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<br />The Role of Tax Revenues <br /> <br />Given that a major portion of Colorado's water project <br />financing needs cannot be met through revenue financing for want <br />of sufficient project revenues, the only alternative left--if <br />Colorado is to proceed with water oro;ect development, especially <br />for the benefit of irrigated agriculture and rural communities-- <br />is the consideration of tax revenues. There are two key issues <br />to be explored in this regard: <br /> <br />(1) Should Colorado continue its historical policy <br />of "pay as you go" financing for major capital <br />investments or should it embark on a program of raising <br />capital in private financial markets through general <br />obligation financing (i.e., creating indebtedness)? <br /> <br />( 2) What tax source or sources should be ut il ized for <br />either or both of these two financing approaches? <br /> <br />with respect to sources of tax revenues, there are three <br />general categories: <br /> <br />(1) General tax revenues (e.g., income taxes, sales and use <br />taxes, "sin" taxes, etc.), <br /> <br />(2) "Economic rents" for the use of publ icly owned <br />resources (e.g., severance taxes, mineral leasing fees, <br />etc.), and <br /> <br />(3) Property taxes <br /> <br />Each of these is briefly disQussed below. Appendix A summarizes <br />the estimated revenues which increases in various taxes would <br />yield. <br /> <br />General Tax Revenues. The state obtains revenues through a <br />wide va1:"iety of general taxe$: income taxes, sales taxes, use <br />taxes, liquor and cigarette taxes, inheritance taxes, etc. These <br />tax revenues can be approprLOlted both for everyday governmental <br />functions (i.e., personnel and operating expenses) and for ~ajor <br />capital investment projects ~uch as buildings, parks, and <br />streets. For example, the General ASsembly has appropriated <br />$78.6 million from general tax revenues since FY 72-73 for the <br />benefit of water development through the Colorado Water <br />Conservation Board construction fund (inclUding the $30.1 million <br />transfe1:"red from the construction fund to the Water Resources and <br />Power Development Authority by S.B. 19, 1981 Session). <br /> <br />The key issue with respect to the availabil i ty of general <br />tax monies for water project development is the intense <br />competition for scarce funds, espe'cially since current <br />projections of annual general fund surpluses are much less than <br />those being made a year ago. The 11'Cst recent unofficial <br /> <br />-6- <br />