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<br />0015H <br /> <br />Activities of Western States Water Council <br /> <br />. Since the meet ing of the WES'l'PO gove rnors at the end of <br />February, the special committee of the Western States Water <br />Counci 1 which is working on the project financing issue at the <br />request of Governors Babbitt and Olson has met again. Bill <br />McDonald is a member of this special committee. <br /> <br />. <br /> <br />'-. <br />, <br /> <br />At the committee's IIlOSt recent meeting, a compromise was <br />reached on an initial position with respect to water project <br />financing. The proposed position, which the full Council will <br />consider at its April 22 meeting, is that western states indicate <br />that they are prepared to provide ~t least partial front-end <br />financing for th0 municipal and industrial (Me. 1) watcl' '><I()ply "IHI <br />hydropower components of projects. The committee was able to <br />agree to this because everyone concurred that the ability of the <br />states to provide financing will in large part be a function of <br />the generation of revenues by a project, which revenues will <br />support the issuance of revenue bonds. M&I water supply and <br />hydropower are the only two project purposes which have any hope <br />of being financed through revenue bonds. <br /> <br />It was further agreed that the states would not try at this <br />time to achieve a consensus on the front-end financing of other <br />project purposes. The reason for this is that all other project <br />purposes will almost always be unable to sustain revenue bonds. <br />Therefore, if a state were to participate in the financing of <br />project purposes other than M&I water supply and hydroelectric <br />power, it would have to use tax revenues either for direct <br />financing or for the retirement of general obligation <br />indebtedness. Because of state constitutional problems and <br />differences in the abilities of states to raise tax revenues, it <br />is unlikely that agreement can be achieved about the financing of <br />project purposes other than M&I water supply and hydroelectric <br />power. <br /> <br />Wes Steiner (Arizona), who has publicly expressed concerns <br />that Colorado will "cut its own deal" before the states establish <br />a unified position, is also a member of this special committee. <br />He appeared to be satisfied with the compromise position, <br />although he had to leave the meeting early. His concurrence is <br />important since he is likely to urge Governor Babbitt to accept <br />the cOl!lprornise as a starting position for discussions with the <br />Secretary and with Congress. <br /> <br />3/83 <br />