Colorado could impose new fees on data centers and renewable energy companies, tax sod grass, or fund a special trust to raise the $20 billion it needs over the next 30 years to ensure it has enough water, as climate change saps streams and shrinks snowpack.
That’s according to a new report issued by a special task force created by Colorado lawmakers last year. Most of the measures the report examined would require action by lawmakers and potentially voters.
Until now, the state has relied largely on taxes collected on oil and gas, mining and coal production to help fund water projects, including shoring up old pipelines and dams, funding water-saving initiatives and buying new supplies.
But those severance tax revenues vary dramatically from year to year and are often diverted by lawmakers to help cope with budget shortfalls. That is a problem that needs to be solved, according to state Sen. Dylan Roberts, a Democrat from Frisco who co-sponsored the legislation creating the task force.
“This report makes clear that Colorado needs a long-term strategy for funding water infrastructure that doesn’t depend almost exclusively on the ups and downs of severance tax revenue,” Roberts said.
Task force members were charged with finding permanent, stable sources of funding that can’t be tapped for other purposes by lawmakers.
“If we could just maintain the funding we have, that would be a start,” said Jim Yahn, a water policy veteran and Logan County commissioner appointed to the task force by Gov. Jared Polis.
The report, produced by the Colorado Water Center at Colorado State University, said the state would likely need several mechanisms to generate the revenue needed, and it cited the success of a 2019 sports betting initiative approved by voters that has generated millions of dollars in tax revenues annually for water projects.
Still, it said, “The gap between the identified need and available funding is a current challenge visible in oversubscribed grant and loan programs, aging infrastructure, and the growing difficulty local governments face in accessing capital for large projects.”
The report cites programs by New Mexico and Wyoming that protect severance tax revenues by placing them in special trust funds that cannot be tapped for other purposes.
Karen Schlatter, director of the Colorado Water Center who led work on the report, said she is hopeful the findings will provide lawmakers with a set of options they can use in combination to stabilize water funding in the future.
Roberts said it is likely that lawmakers will work on new legislation next year to begin to address long-term funding solutions.
That’s something Yahn, who is the past manager of North Sterling and Prewitt reservoirs in northeastern Colorado, would like to see as well.
“A long time ago the state did something right by creating the revolving loan fund,” Yahn said, referring to a loan pool run by the Colorado Water Conservation Board that water districts can borrow from and whose loan interest payments help finance subsequent loans for other water districts.
“We got loans for our spillways and diversion structures and now we are paying it back in a steady stream that other people can use. But when you sweep it out, we don’t have it,” he said, referring to cash diversions by lawmakers. “The next step would be finding some legislators that would be willing to keep the money where it is. If we could get the ball rolling on that, that would be the next step I would like to see.”