FLOOD02593

• County: Statewide
• Community: State of Colorado
• Basin: Statewide
• Title: Water Project Development Financing Needs
• Date: 10/16/1986
• Floodplain - Doc Type: Educational/Technical/Reference Information

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history of the program, most of that from general fund taxes. By statu:e, ten
percent of the federil.! mineral leasing money that comes back to the state is
earmarked to the program. Also, federal oil shale trust funds have been appropriated
in the past primarily for projects in northwestern Colorado that are in oil shale
country. And finally, a portion of the state's severance tax on mineral production,
which is a relatively small tax compared to places like Montana and Wyoming, is
available for transfe1' into the construction fund. However, no money has ever been
expended from the severance tax trust fund.

There are a couple of observations about our loan program in Colorado which I
think are generally applicable. One, these are often talked of as revolving funds.
Utah uses that term. But they are not really revolving funds. At 5 percent with a
40-year repayment period, the future dollar a state gets back is almost worthless
compared to the dollar loaned out. . That is something our legislature is beginning to
struggle with. The concept when this thing was set up in 1971 was that with an
initial infusion of dollars, we would be on our way. Thirty projects and $50 million
later, annual repayments are only $3-4 million. It just isn't going to add up if
inflation is anywhere dose to what it's been in the past.

The other observation is
scarcity of state tax dollars.
use, as I previously discussed.

that loan programs are constantly competing for a
That's the politics of which stream of revenues you

The second financing device used in Colorado is revenue bonds. The state as
such doesn't have the power to go into debt, so it cannot issue revenue bonds, with a
couple of minor exceptions. Political subdivisions of the state can issue revenue
bonds - cities, counties, water conservancy districts, water conservation districts,
special purpose districts, etc.

We also have a political subdivision of the state that has statewide jurisdiction.
It is not an agency of the executive branch and was specifically created to get
around our constitutional problem. It is called the Colorado Water Resources and
Power Development Authority. Although the Authority cannot consider the financing
of a project until authorized to do so by a joint resolution of the General Assembly
signed by the governor, the ultimate decision as to whether to finance a project, and
ii so under what conditions, lies solely with the Authority. That's what legal counsel
thought was necessary to create an arm's length relationship with the state in order
to avoid the constitutional problem.

The third means of financing used in Colorado is general obligation bonds. The
state can't do it because of the constitutional prohibition, so we do as all other
states have done and provide that authority to political subdivisions. The important
point ateut general obligation tends is that it is a means for providing subsidies to
certain projects. General obliga:ion bonds are a way to solve the problem of lack of
project revenues, This is done by using a general tax base to repay at least a part
of the bond obligation, project revenues being insufficient for that purpose.

Finally, Colorado has proposed a new financing mechanism. It relates to the
federal power revenues from the Colorado River Storage Project (CRSP). It is
Colorado's view that commitments haVE: been made by the seven Colorado River Basin
states, the power users, and ,Congress to the building of a certain number of
authorized projects. We at the same time have candidly admitted that of our five
remaiC1ing authorized projects, we will be luckly if we get one. But we strongly
believe the commitment was made to the four others.