I_WRRC_2016A 08/24/2016 08:16:43 AM Committee Summary

08:17 AM -- Call to Order and Committee Introductions



Representative Vigil called the meeting to order, and Representative Mitsch Bush and Senator Baumgardner welcomed the committee and audience members to Steamboat Springs. The other members of the committee also introduced themselves.





08:22 AM -- Alternative Transfer Methods and Water Banking



Terry Fankhauser, Colorado Cattleman's Association, introduced himself and briefly described the Ag Water NetWORK, an initiative created by the Cattleman's Association and the Partners for Western Conservation in order to help keep agricultural water connected to agricultural land. Mr. Fankhauser discussed a survey conducted by the Ag Water NetWORK examining the effects of water banking and alternate transfer methods.



08:29 AM



Phil Brink, Consulting Coordinator, Ag Water NetWORK, introduced himself and distributed his presentation and a summary of the recent survey regarding agricultural water right holders (Attachments A and B). Mr. Brink discussed the Colorado Water Plan and stated that the plan calls for agricultural water leasing to meet the expected municipal and industrial gap (M&I gap). Mr. Brink explained the structure of the survey and discussed some of the results of that survey. The survey showed that roughly two thirds of the users surveyed are either interested or may be interested in leasing water to upstream or downstream users. The survey also showed that water users are worried about how leased water would be used; concerned that water rights could be put in jeopardy; preferred reduced total delivery over other practices; and felt that more research was needed about cropping systems and soil quality under reduced or fallow irrigation. Mr. Brink noted that the project has been funded by the Walton Foundation.



Attachment A.pdf Attachment B.pdf



08:45 AM



In response to a question from the committee, Mr. Brink stated that the NetWORK sent out approximately 5,000 surveys. Mr. Fankhauser responded to questions from the committee concerning how water rights of users leasing their water can be preserved. Mr. Brink and Mr. Fankhauser responded to further questions regarding the responses and comments received in the survey.



08:57 AM



Mr. Brink stated that the Ag Water NetWORK is currently working to further examine agricultural water rights as well as alternate transfer methods of agricultural water rights.



08:58 AM -- Results of Public Opinion Survey Concerning the State of the Colorado Water



Floyd Ciruli, Director, Crossely Center for Public Opinion within the Josef Korbel School of International Studies at the University of Denver, introduced himself to the committee and described the recent survey concerning the state water plan. Mr. Ciruli discussed the results of the survey, provided in a presentation (Attachment C). The survey examined opinions of the Colorado Water Plan and its implementation. as well as opinions regarding water conservation, water storage, and water restrictions. The survey showed that Colorado voters considered water conservation and drinking water quality the most important water issues in the state. The survey also showed that Colorado voters thought that water storage and conservation are both necessary, local planning is preferred over







federal intervention, and that few people who where surveyed had heard of the Colorado Water Plan. Mr. Ciruli responded to questions from the committee concerning the results of the survey.



Attachment C.pdf



09:30 AM -- Update on Proposed Ballot Measures Affecting Colorado's Water Law



Mr. Ciruli discussed current ballot measures affecting water law within the state. Mr. Ciruli talked about Amendment 71, also known as Raise the Bar, and how that initiative would impact the likelihood of future initiatives being on the ballot. He also discussed the impact of Initiative 78, which would require oil and gas companies to pay a mandatory setback fee.



09:32 AM -- Financing Water Projects as related to Colorado's Water Plan and State Wate



Bill Levine, Budget Director, Department of Natural Resources (DNR), discussed the severance tax and it's impact on state finances. Mr Levine distributed a presentation to the committee (Attachment D). He explained how the tax is distributed, explaining that 50 percent of the tax is distributed to DNR. Half of the severance tax finds that are distributed to DNR is then distributed to the perpetual base fund. MR. Levine discussed how Tier 1 and Tier 2 programs are funded within the operational fund, and stated that several Tier 2 programs have large impacts on the water community in the state, including the Water Supply Reserve Fund. Mr. Levine discussed the Colorado Water Board (CWCB) construction fund and some projects that receive moneys from the construction fund.



Attachment D.pdf



09:38 AM



Mr. Levine discussed the current energy prices and how energy prices have decreased in recent years. He explained that lower energy prices have affected the amount of severance tax dollars collected, and discussed the impact of ad valorem offsets on severance tax revenue. Mr. Levine responded to questions from the committee concerning set backs and their impacts on the severance tax revenue stream and current projections for the severance tax revenue, specifically citing a lower impact of the ad valorem offsets. Mr. Levine also responded to questions concerning the affects of the recent Colorado Supreme Court Decision, B.P America. v. Colorado Department of Revenue.

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09:51 AM



Mr. Levine discussed the volatility and variance of the revenue from the severance tax and explained that the revenue stream coming from the severance tax is unpredictable. Mr. Levine further discussed B.P. America and explained the costs of the decision to the state. The decision allows oil and gas producers to deduct a broad array of costs for tax purposes. Mr. Levine explained that the state of Colorado owes B.P. America $2.4 million as a result of the decision and owes other related conferee cases $6.8 million. He also stated that the state must pay amended tax returns related to return on Netback Expense Report Forms (NERF) deductions, totalling approximately $20 million. NERF deductions include direct costs and forgone returns on investment as a result of expenditures for the transportation, manufacturing, and processing of oil and gas. Mr. Levine explained that additional refunds may still be filed, increasing the amount owed by the Department of Revenue. Mr. Levine responded to further questions regarding the decision from the committee.





10:03 AM



Mr. Levine responded to questions from the committee concerning public private partnerships.



10:07 AM -- Public Testimony





10:07 AM -- John Weiner, representing himself, introduced himself to the committee and distributed information regarding alternate transfer methods (Attachment E). Mr. Weiner discussed alternate transfer methods and the effects on agricultural in the state. Mr. Weiner responded to questions from the committee.



Attachment E.pdf



10:21 AM



The chair closed public testimony.



10:21 AM



The committee adjourned.