From The Pueblo Chieftain (Chris Woodka):
Water planners are looking at potentially leaner times for grants that fund projects, particularly for smaller water districts, towns or farms.
The funding crunch is coming because of an April opinion of the Colorado Supreme Court in BP America v. Colorado Department of Revenue, in which the oil giant prevailed in its arguments of which types of activities are exempt from mineral severance taxes. The impact could mean a repayment of up to $125 million and reduced future revenues.
Those taxes are the source of funding for Water Supply Reserve Account grants that are funded through the state’s basin roundtable process. Those grants are approved by the Colorado Water Conservation Board.
“Moving forward, revenues will be down 12.5 percent,” Brent Newman of the CWCB told the Arkansas Basin Roundtable executive committee Wednesday. “With the implementation of the Colorado Water Plan, we have to make sure grant programs meet standards.”
After last month’s meeting of the Interbasin Compact Committee, CWCB staff is preparing a new plan of action to fund water projects that does not rely on the up-and-down revenues of mineral severance taxes.
That pot of money is now split among local governments, the Department of Local Affairs and agencies within the Department of Natural Resources, including the CWCB. The problem is that when oil, gas and mining activity drops or prices decrease, so do tax revenues. The state Legislature raided the revenues to meet budget shortfalls during the 2008-09 recession, showing they are unreliable.
The court decision will decrease the size of the fund pool. Newman stressed that carry-over funds are still in place, although roundtables already are starting to rein in their requests. The Arkansas Basin Roundtable hopes to move as much as $500,000 in grants ahead this year.
The state water plan calls for adding $100 million funding annually for water projects beginning in 2020, and the IBCC and CWCB have kicked around ideas — such as a container tax for water and soft drinks or a statewide tap fee — to provide that money.
But in the short term, CWCB staff is proposing using its own banked funds to provide a stable source for water projects for the next five years. The proposal includes establishing a $50 million loan fund that would be repaid, $10 million annual funding to the WSRA, $5 million annually for watershed restoration and $10 million annually for grants.
“Not everybody agrees with me, but I think it’s going to be a lot more restrictive,” said Jay Winner, general manager of the Lower Arkansas Valley Water Conservancy District and a member of the IBCC. “Under the water plan, in every basin, the gaps can’t get any bigger, but it could mean the large municipalities will take ag out of production.”
Small communities could also be in trouble as funds tighten, said Jim Broderick, executive director of the Southeastern Water Conservancy District. Many of the participants in the Arkansas Valley Conduit project will depend on small grants to fund internal projects to connect to the new waterline when it is completed.
The plan is to put a funding system in place for 2017 through the water projects bill, but time is short, since the CWCB usually finalizes the list by November, and it meets just three times. The IBCC only has one meeting, in August, scheduled to discuss the idea, and typically has required months or years to work out differences among regions in the state.
“If we don’t have an agreement, this isn’t going to happen,” Winner said.