Colorado lawmakers OK $67M for water programs, cut tax break for “free” sports bets

Colorado lawmakers OK’d $67 million for water programs, eliminated a sports betting tax break to generate more cash for those same programs, and created a special panel to examine better ways to fund water programs in the future.

Those are among a handful of bills that were approved before work at the State Capitol ended May 7.

“Even in the face of a challenging budget outlook for the state, the 2025 legislative session was actually a very positive one for water in Colorado,” said Sen. Dylan Roberts, a Democrat from Frisco who is also chair of the Senate Committee on Agricultural and Natural Resources.

Sen. Roberts pointed to “the annual water projects funding bill that was at a near-historic level of $67 million, and a sports betting bill which will add, on average, $12 million in additional funding every year by eliminating the tax deduction that sports betting companies were taking on promotional bets.” He also singled out “important policies like consolidating and improving water supply forecasting and limiting new non-functional turf.“

So here’s how it went.

Colorado Water Conservation Board Projects

SB 283 is an annual bill that provides grants and loans to projects requested by the Colorado Water Conservation Board (CWCB). None of the money is from the state’s general fund; it includes interest earned from CWCB loans, severance taxes and sports betting revenue. The largest allocation this year saw a 25 percent increase in sports betting revenue from $23 million to $29 million for grants to help implement the state water plan. Other appropriations include:

  • $6 million to help retire irrigated acreage in the Republican River Basin to comply with interstate compact requirements;
  • $5 million for watershed restoration and flood mitigation projects in areas susceptible to post-wildfire impacts;
  • $2 million to enhance water supply forecasting and snowpack measurement; and
  • $1.4 million for urban turf replacement programs.

Sen. Cleave Simpson, R-Alamosa, emphasized that the bill has “zero impact on the general fund.” Sen. Roberts echoed that point and noted that “we have put in place a system where water project funding can continue regardless of what’s happening with our state budget by having these funds come from elsewhere.”

Winding Down a Sports Betting Deduction

Sports betting revenue has been used to help fund the state water plan since passage of Proposition DD in 2019, which legalized sports betting and imposed a 10% tax on “net” sports betting proceeds. In calculating net revenue, the 2019 measure allowed sports betting operators to deduct payments to players, federal excise taxes and free bets offered as promotions.

HB 1311 reduces the free bet deduction to 1% of all bets placed with a sports betting operator beginning Jan. 1, 2026, and eliminates it entirely on July 1, 2026. It’s projected to raise an additional $3.2 million in revenue for the Water Plan Implementation Cash Fund in FY 2026, $12.9 million after elimination in FY 2027, and $11.5 million in FY 2028.

House Speaker Julie McCluskie, D-Dillon, testified that the free-bet deduction is no longer necessary to attract sports bettors as witnessed by the increase in gaming revenue above the $29 million projected when Prop DD passed. “Allowing sports betting operators to deduct those free bets once served a very important purpose, that was to attract new customers,” she said, “and it also pulled people from the unregulated market to the regulated market.”

Severance Tax Funding for Water

SB 40 creates a 10-member task force to work with a contractor hired by the Department of Natural Resources (DNR) to study the future of severance taxes in funding water projects. Severance taxes are assessed on the extraction of oil, gas, coal and other minerals, with 25 % of the revenue reserved for use by the CWCB. That money provides $50 million on average in new water project loans each year, and the interest on those loans supports $20 million in new water project grants.

Severance taxes are a volatile source of revenue, however, and Sen. Roberts noted in committee testimony that “as we face an energy transition in our state [toward renewable energy], they could become ever more volatile.” Severance tax revenue also has been used to help balance the state budget as was done last year, further diminishing dollars for water.

SB 40 requires the task force to explore ways to continue funding water projects in the face of declining severance tax revenue, and identify how to avoid transfers to the general fund to backfill budget shortfalls. A draft report with findings and recommendations to the task force no is due no later than Jan. 15, 2026, with a final report due to the legislature’s Water Resources and Agriculture Review Committee by July 15, 2026.

Restrictions on Nonfunctional Turf to Conserve Water

HB 1113 builds on legislation passed last year that prohibited the state and local governments from allowing the installation of non-functional turf—grass that is not used primarily for recreational purposes—in new governmental, commercial, institutional, industrial or common interest community property.  The intent was to conserve water, since up to half of urban water use is for irrigating outdoor landscapes.

HB 1113 expands those restrictions by prohibiting local governments from allowing the installation of non-functional turf in new multi-family housing projects—apartments and condominiums—after January 1, 2028. It exempts native grasses and other low-water use plants, and as Rep. Lesley Smith, D-Bouder, noted “we are really trying to encourage turf that has been hybridized for arid conditions.”

Water Supply Forecasting through Snowpack Measurement

HB 1115 aims to establish a more cohesive statewide approach to measure and forecast water supply contained in snowpack. House Speaker Julie McCluskie noted that “Snowmelt runoff provides as much as 80 percent of our annual surface water supply, so knowing what we have stored in those snowbanks makes all the difference.”

The current system for measuring and forecasting water supply is fragmented among several state and local entities, and the cost of using new technologies is high. To better coordinate these efforts, HB 1115 authorizes the CWCB to administer a water supply and forecasting program that will collect and disseminate data on snowpack levels and investigate the latest technologies to more accurately determine and forecast water supply. Sen. Marc Catlin, R-Montrose, referred to snowpack as “the cheapest reservoir we’ve got” and said the bill will “help everybody plan better; communities, recreationalists and agriculture.”

Abandoned Mine Cleanup to Improve Water Quality

There are over 23,000 abandoned mines in Colorado, many of which pose a threat to water quality from heavy metals contained in waste piles and acid mine drainage. Current law makes clean up of these sites difficult due to stringent regulations that treat reclamation as a new mining operation.

SB 54 attempts to encourage removal of small abandoned mine waste piles on less than five acres through the issuance of reclamation-only permits on an expedited basis by DNR’s Division of Reclamation, Mining and Safety. An applicant must demonstrate that it has the legal authority to conduct reclamation on the site, and file a financial warranty to ensure completion of activities. To achieve timely clean-up, reclamation-only permits are limited to three years. Sen. Simpson, a mining engineer by training, said the bill would “create a different avenue with  less challenges about how you might mitigate that small footprint and still protect the environment and public safety.”

Independent, non-partisan journalism costs money. Please support Fresh Water News by making a donation now.

Donate
Translate »