Colorado Water Projects Bond, Referendum A (2003)
The Colorado Water Projects Bond Referendum, also known as Referendum A, was on the November 4, 2003 ballot in Colorado as a legislatively-referred bond question, where it was defeated. The measure would have allowed the Colorado Water Conservation Board to borrow up to $2 billion for public and private water projects by issuing bonds.
|Colorado Referendum A (2003)|
Election Results via: Colorado Secretary of State
Text of measure
The language appeared on the ballot as:
|“||Shall the state of Colorado debt be increased $2 billion, with a repayment cost of $4 billion, maximum total state cost, by an amendment to the Colorado Revised Statutes providing for drought relief by the financing of improvements to water infrastructure in Colorado, and, in connection therewith, authorizing the Colorado water conservation board to issue revenue bonds for the construction of private or public water infrastructure projects costing $5 million or more that have been approved by the governor; authorizing the water conservation board to recommend projects, including at least two projects from different river basins with a start date of 2005, and requiring the governor to approve at least one such project; setting aside $100 million of bond proceeds to finance projects, or portions of projects, that augment or improve existing facilities or conserve existing water supplies without creating new storage facilities; exempting the bond proceeds, the proceeds of sales by the board of water, power, or other assets from facilities financed by the bonds, and any earnings from all such proceeds, from the revenue and spending limits imposed by article X, section 20 of the state constitution and article 77 of title 24, Colorado Revised Statutes; and requiring the general assembly and executive branch agencies to adopt by July 1, 2004, any necessary statutes and rules, respectively, to ensure the marketability of the bonds authorized by this measure?||”|
Why is this proposal on the ballot?
This year a state law was passed that establishes a process for the Colorado Water Conservation Board, a state agency, to borrow money for water projects. The Colorado Constitution, however, requires voter approval before the state may borrow money and to exempt money from state spending limits. For this reason, the state legislature is submitting to the voters the question of whether to borrow money for water projects and exempt the money from state spending limits. If the proposal is not approved, the state law is repealed.
Borrowing limits and liabilities
The proposal allows the Colorado Water Conservation Board to borrow up to $2 billion by issuing revenue bonds for one or more water projects. The total principal and interest payments cannot exceed $4 billion. The borrowed money must be repaid from revenue received from the projects. However, in the event of a default, there is no prohibition against the state repaying the debt. Of the $2 billion total, at least $100 million must be set aside to improve existing water facilities or to pay for water conservation measures.
Projects eligible for funding
Projects eligible for funding may acquire water rights, build new storage, improve existing facilities, or increase water conservation. Projects may also provide environmental and recreational benefits, protect agricultural water, or assist communities negatively impacted by water projects. Ineligible projects include public waste water and drinking water projects, and projects costing less than $5 million.
How would projects be approved?
Public entities such as cities, water districts, or state agencies; private entities; or combinations of the two may propose water projects to the Colorado Water Conservation Board. The board must evaluate requests for funding and may recommend projects to the Governor for final approval. If the board makes recommendations, it must recommend at least two projects from different river basins with a start date of 2005, at least one of which must be approved by the Governor. Upon approval of a project by the Governor, the board may borrow money by issuing bonds.
The following arguments in favor of Referendum A were provided in the state Blue Book Analysis:
1) A new option for financing water projects may help provide additional water for Colorado’s residents, protect against future droughts, and meet the increasing demand for recreational and environmental water uses. Water usage during the recent drought depleted many reservoirs, resulting in restrictions on lawn watering, fee increases, and financial hardship for people who depend on water for their livelihood. Additional water storage might lessen these impacts in the future. Moreover, in most years, Colorado does not have enough storage to hold all the water it is allowed by interstate law to use. Storing water that is currently lost to downstream states provides an alternative to pumping ground water or buying water from farms or ranches.
2) This program provides an opportunity for water users to work together on projects that benefit a number of users, but that may be too costly for individual users to build. For example, a single project could provide water for a city, recreation, and farms, and generate money to compensate an area that loses water because of the project. This program also could lead to public-private partnerships, where the skills and money of each sector can be combined to solve shared water supply problems. At the same time, the program does not dictate specific water projects, require participation, or eliminate government permitting requirements.
3) Having a single state agency, the Colorado Water Conservation Board evaluate and obtain financing for water projects may accelerate the construction of projects. The board brings expertise in water policy and experience from across the state on water issues. Its geographically diverse membership allows it to consider the interests of small and large communities, the state’s different regions, and the state as a whole. In addition, the board is currently conducting a statewide water supply study with the assistance of local communities to identify water needs and projects in each river basin. Some of these projects may eventually qualify for money borrowed under this proposal.
The following arguments against Referendum A were provided in the state Blue Book analysis:
1) This could be the largest debt in state history. This debt authorization lasts until the Colorado Water Conservation Board issues the entire $2,000,000,000 and is repaid. With no time limit set in the proposal, Coloradans could be paying this debt back for generations. The program does not identify specific projects to be funded or require public input on the selection of projects. This program grants too much authority to the board and leaves questions unanswered. Within the $4 billion repayment limit, there is no limit on interest rates, total interest paid, administrative costs, or the length of time to repay or issue bonds. Because it has no experience in issuing bonds, the board may not have the expertise to obtain the best financing. Customers of water projects funded by this proposal may see their rates increase. Also, if the water projects do not produce enough money to repay the bonds, state policymakers may feel obligated to repay the bondholders. In addition, the deadlines in the program may result in the board recommending projects that are neither desirable nor ready for funding. Having a single elected state official select projects for funding may further politicize decisions that have historically been made at the local level.
2) Another financing tool is not necessary to address Colorado’s water needs. No feasible water project has ever failed for a lack of financing. Cities and other water users can already borrow money for water projects. They also may obtain financing through the Colorado Water Resources and Power Development Authority or loans and grants from the Colorado Water Conservation Board. The state government should not make loans that benefit private corporations or for water projects that may not earn enough revenue to repay the debt. Private lenders will finance prudent proposals, without the risk of a bailout by taxpayers for failed projects. Environmental, recreational, and agricultural water users are less likely to benefit from this program because their water uses typically cannot generate sufficient revenue to pay the full cost of water projects. In addition, this program does not change environmental, permitting, or other legal requirements, which have been some of the greatest obstacles to building major water projects.
3) Water projects can negatively impact the environment and local communities. For example, some water projects can flood scenic areas and damage wildlife habitat by changing water temperatures and eliminating or greatly reducing stream flows. Others can increase water treatment costs and limit future economic development opportunities for communities that lose water because of water projects. The board is not required to repair or pay for any damage to an area’s environment or economy, or to consider cheaper and quicker water supply alternatives such as increasing water use efficiency or obtaining temporary water transfers from farms and other water users during dry years.
- Colorado 2003 ballot measures
- List of Colorado ballot measures
- 2003 ballot measures
- History of Initiative & Referendum in Colorado
- Colorado State Legislative Council, Ballot History
- Referendum A Fiscal Impact Statement
- Referendum A Legislative Analysis
- Campaign contributions to the Referendum A campaigns, pro and con