Amid drop in energy revenue distributions, official fears future state raids on program

Direct distributions to local entities from two energy-related funds are down sharply from a year ago. But a Rio Blanco County commissioner fears worse things for the future of the program if the state-budget picture doesn’t improve.

The state Department of Local Affairs said this week $37 million in severance-tax and federal-mineral-lease funds will go to 506 counties, municipalities and school districts through the direct-distribution program. That compares to a record $80 million last year, but is up from $32 million the year before.

Last year’s spike resulted from high natural gas prices and a legislative change in the distribution formula. The drop this year is largely a result of the subsequent drop in prices in gas and other commodities. But Rio Blanco County Commissioner Ken Parsons fears the program could be subject in future years to raids by the governor’s office to balance the state budget.

Gov. Bill Ritter already has turned repeatedly to an energy-impact-grant program derived from the same revenue sources to address shortfalls in the state’s general fund. But he has not tapped direct-distribution money, which is allocated based on formulas accounting for levels of local energy-development activity.
Ritter isn’t seeking re-election, and Parsons wonders whether Colorado’s next governor will leave the direct-distribution program alone.

Parsons, a member of the state’s Energy and Mineral Impact Advisory Committee, says many local officials are “feeling cranky” about the continued raids on the grant-fund program and the prospect the state will continue addressing its budget problems at the expense of local governments. Those governments depend on the energy funds to address critical infrastructure needs, he said.

“Local governments are feeling the pinch every bit as much as the state government does,” he said.

He said the issue reflects a fundamental problem of the state refusing to responsibly deal with the discrepancy between its revenues and expenditures.

“There is a structural deficit in the state government that hasn’t been addressed,” he said.

Some $58 million in impact funds was diverted to the state’s general fund in the 2009-10 fiscal year. Earlier this summer, Local Affairs personnel voiced hopes of being able to offer $76 million in energy-impact grants and loans over this fiscal year.

However, new budgetary measures announced by Ritter in August meant the grant program was suspended. Ritter reallocated $20 million in impact funds to the state general fund and reserved another $30 million in impact funds in case they also are needed for budget balancing.

Fortunately for local governments, the action didn’t affect the awarding of about $6.1 million in impact funds in August for projects that had been suspended from the 2009-10 fiscal year.

Garfield County led the state this year in the amount of severance-tax direct distributions to counties and their local governments, at $1.83 million, followed by Weld County with $1.82 million and Mesa County with $1.5 million.

Garfield County and its municipalities also received the most federal-mineral-lease direct distributions, at $4.3 million, followed by Rio Blanco County with $4.2 million.


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