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<br />fiscal year. An expenditure of monies in the fund for water <br />oroject construction has never been made. <br /> <br />property Taxes. Section 11 of Article X of the Colorado <br />Constitution permits the state to levy a property tax of up to <br />four mills, with .an additional one mill levy for the erection and <br />maintenance of buildings at state educational institutions. <br />Al though used previously, this state assessed property tax was <br />phased out in the 1960s. At current property valuations, a one <br />mill levy would generate about $15 million per year. <br /> <br />General Obligation Financing <br /> <br />The above sources of tax revenues are not insubstantial. <br />aowever, these must be measured against all capital investment <br />needs facing the state, as well as the hundreds of millions of <br />dollars of needed water project construction and rehabilitation <br />inCluding "up front" cost-sharing on federal projects (see, for <br />example, the investment needs set forth in the final report of <br />the Blue Ribbon Panel and the Five Year Capital tnvestment Plan, <br />FY 1983-1g87). When viewed from this perspective, it appears <br />that the historical policy of "pay as you go" may not be <br />responsive to the capital intensive requirements of water project <br />development and rehabilitation which must be addressed over the <br />next two decades. <br /> <br />I f "paying as you go" is found to not meet Colorado's <br />captial investment needs then serious consideration must be given <br />to commencing a general obligation financing program. Implemen- <br />tation of such a program would require two things: <br /> <br />( 1 ) Amendment of the State Constitution, which presently <br />specifies that "the st.ate shall not contract any debt <br />by loan in any form," except in a very few instances <br />(Section 4, Article XI), and <br /> <br />( 2) Pledges of speci Hed future tax revenues wh ich would be <br />used to retire any. indebtedness for want of sufficient <br />project revenues. <br /> <br />With respect to pledges of future tax revenues, there are, <br />as discussed above, several possible sources. However, not all <br />taxes are equally attractiv.e for general Obligation financing <br />purposes. This is because the amount of capital which can be <br />borrowed is a function of the anticipated stability of the tax <br />revenues which are pledged to retire the indebtedness to be <br />incurred. <br /> <br />The IIDre stable the tax revenues are expected to be, the <br />lower the revenue to annual debt service ratio requirement will <br />be. For example, property taxes are regarded by investment <br />bankers as the best source of pledged revenues. Thus, for every <br /> <br />-7- <br />