| OCR Text |
Show as necessary for the purpose of achieving a power rate based upon the cost of all the proposed power developments in the Upper Basin and also for the purpose of providing a pool of financial assistance to irrigation developments so that their undertaking will be dependent solely upon their own merits and without regard to the geographic accident of their location in relation to a particular power development. As has been pointed out, the policy of application of power revenues to project costs was first laid down in 1906. It was reiterated in the Hayden-O'Mahoney amendment of 1938. It has been applied ever since that date. It is an established policy that is fully consistent with sound government and with sound accounting. It is highly beneficial to existing and further water resource development in the Western States. The historical basis for the traditional policy of application of the revenues derived from the interest component of power rates to the return of the Federal Government's investment is so often used as to give rise to the statement: 'Yes-we understand the historical argument. We understand that such has been the practice ever since the year 1906; but what about the merits ?' Merit, as well as tradition, is on the side of adherence to the policy of application toward return of costs of Federal Reclamation projects of the revenues derived from the interest component of power rates. The basis for not requiring the return, by those who repay and return the reimbursable costs of Federal reclamation projects, of interest on those costs, lies principally in the fact that encouragement thus given to the undertaking of projects for the development, conservation and utilization of water resources produces benefits for the general welfare of the country ,as a whole and that the cost of providing such encouragement should, therefore, be borne by the country as a whole. In the final analysis, under the provisions of the Hayden-O'Mahoney amendment, once power revenues have paid into the Reclamation Fund all sums allocated to be returned from the power revenues of a particular project, then all subsequent net power revenues flow into the General Fund of the Treasury. Thus, the Federal Government stands, in time, to collect directly, many times the interest first forgiven. And this is in addition to the gain in Federal revenues derived from increased tax revenues in the area served by the project. The Upper Colorado River Commission confidently predicts that studies will show conclusively that in particular areas this gain in tax revenues alone is much more than sufficient to reimburse the Federal Government with interest for its total outlay in the construction of a project. -23- |
