Lawmakers eye sports betting tax to pay for water conservation

Funding for the Colorado Water Plan may hit historic highs this year, but not enough to avoid projected water shortages

Floating the Ruby Horsethief section of the Colorado River in August, 2017. (Photo by John Herrick)

Lawmakers are considering a plan to legalize sports betting in Colorado and ask voters to approve a tax on the betting that would be earmarked for water projects.

Betting is currently allowed in casinos, but a bill introduced Thursday would expand it to a range of sports, such as collegiate basketball, and allow betting with online apps.

The bill would also refer a measure to the November ballot asking voters for a 10% tax on net proceeds from sports betting, most of which would be dedicated to managing the state’s water supplies. The tax is projected to raise up to $10 million annually.

The bill arrives with only about two weeks left in the session, but it already has support from key Democratic and Republican leaders in the House and Senate. 

In 2018, the U.S. Supreme Court struck down a ban on sports betting. Since then, 40 states and the District of Columbia have proposed or enacted laws to legalize, study or regulate sports betting, according to the National Conference of State Legislatures.

Some lawmakers may want to see the revenue fund other priorities, such as transportation projects and K-12 education — programs the state has long struggled to fully fund.

But Majority Leader Alec Garnett, a Democrat from Denver who is sponsoring the bill, said the money would be best used to help pay for the Colorado Water Plan, an unfunded roadmap, finalized in 2015, to prevent statewide water shortfalls. State researchers expect that by 2050 or sooner, the state could experience water shortages because of population growth and climate change.

The water plan is projected to cost about $100 million per year for the next 30 years, totaling $3 billion by 2050, to fully implement. The biggest expenses are expected to be payments to farmers to lease their water to maintain stream flows and construction of dams for water storage.

Lawmakers this year are proposing to allot historic amounts to implement the water plan — approximately $27 million, more than double the amount the water plan has received in past years — but it’s still a far cry from the $100 million-per-year goal.

And Garnett acknowledged that $10 million per year from sports-betting taxes would be a relatively small contribution, but, he argued, it will at least be a consistent funding source.

“That’s something that the Colorado Water Plan hasn’t had yet,” he told The Colorado Independent.

The Colorado River near Hite, Utah on Oct. 20, 2018. (Photo by John Herrick)

Reducing reliance on the Colorado River

Making the water picture even more complicated, Colorado is among seven western states and tribes that share the increasingly depleted Colorado River. Earlier this year, under U.S. government orders, water managers from the seven states hammered out the Drought Contingency Plan, under which they pledge to use less water. President Trump signed that plan into law this week.

That obligation creates even more urgency for the state to start conserving water. This year, the Colorado Department of Natural Resources requested an additional $20 million for conservation. But lawmakers rejected it, in part because they say it remains unclear how specifically the state would spend it. Instead, the Colorado Water Conservation Board received about $1.7 million to begin developing a plan this summer on how Colorado will meet its responsibility to reduce water usage through a so-called “demand management” program.

Some lawmakers don’t believe the state really needs $100 million annually to achieve its water management goals. Others say it just wasn’t a priority this year; Democrats, who now hold the majority in both the House and Senate, did not mention funding for water conservation and storage in their opening day speeches. Gov. Polis also fought hard for his other priorities, like free all-day kindergarten, which gobbled up much of the surplus in the state budget.

But Sen. Don Coram, a Republican from Montrose, said that the amount lawmakers may allocate this year  — $27 million, plus any amount that might come from sports betting taxes in the future — won’t be nearly enough to implement the water plan.

He’s been trying to introduce a bill that would enact a surcharge on water usage above a certain amount, likely making it more costly to water lawns. But he has been unable to get any Democrats to sign on to the proposed fee hike, in part because it targets urban water users. The bill has been scuttled and is unlikely to see daylight in the last weeks of the session.

“The priorities are not there right now,” Coram said, echoing similar statements made last year at the end of the legislative session.

Blue Mesa Reservoir on Oct. 22, 2018. (Photo by John Herrick)

‘If you don’t have water, you’re out of business’

Compared to historic averages, since 2001, Colorado has experienced high temperatures and a slight decline in precipitation — conditions hydrologists expect is the “new normal.” Last summer, Aspen put in place lawn watering restrictions and the state issued irrigation prohibitions along the Yampa River. Fishing prohibitions were put in place across the state to protect species stressed by warm, low water flows. Drought conditions (water wonks prefer the term “aridification”) are becoming more common in the West, meaning the entire western landscape is drying out. Even if precipitation in the future holds steady, hotter temperatures due to climate change will continue to deplete reservoirs through a phenomenon dubbed “hot drought.”

Nevertheless, heavy snowfall this winter has lifted nearly the entire state from its longstanding formal “drought” designation, according to the U.S. Drought Monitor. Given this year’s above-average snowpack, it’s easy to forget that Colorado has been in a 19-year drought.

“The situation has changed a little bit. We’re looking at near-record water this year,” Coram said.

“But two things never last,” he said, “wet years and dry years.”

Looking ahead, the Gates Family Foundation and the Walton Family Foundation, philanthropies that fund water conservation efforts, are deciding whether to help put a still-unspecified water funding proposal on the 2020 ballot. Stakeholders have not settled on a single idea for how best to fund those efforts or even whether to pursue the idea in earnest.

Even if such a measure were to make it to next year’s ballot, it could be a tough sell to Colorado voters, whom history has shown rarely approve statewide tax increases. For example, last November, they rejected a ballot measure to raise up to $1.6 billion per year for preschool through 12th-grade schools and another to raise up to $767 million a year for transportation projects.

Odds of passing a water tax would improve if voters understood the specific projects needed to conserve water, said Richard Van Grytenbeek, an outreach coordinator with Trout Unlimited, which helps coordinate and pay for projects in which farmers lease their water rights to maintain river flows for fish habitat.

Van Grytenbeek said projects such as culvert repairs, river diversions, and headgate upgrades can cost hundreds of thousands of dollars. They may seem uninspiring to voters, he said, but they are necessary.

“People will recognize that if you don’t have water, you’re out of business. It’s the next generation of oil,” Van Grytenbeek said. “Water is going to be the most sought after commodity in the future.”

It’s unclear whether Democrats will pass a bill legalizing sports betting. Some may have philosophical concerns about gambling. But Garnett said he plans to allocate some of the “sin tax” revenue from sports betting to behavioral health services for gambling addiction. Plus, he said, gambling is already happening on the black market. He said the bill will allow the state to regulate the industry.

“We are bringing it into the sunlight,” he said. “We’ll have a better sense as how much it’s happening.”

The bill will first be taken up in the House Appropriations Committee as soon as next week.

1 COMMENT

  1. Thanks for covering this important issue. I’m afraid most of us urban dwellers give water scarcity little thought. Lawns have to go,

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