Bill would allow FML districts to invest capital
DENVER — Counties that have created their own special districts to dole out federal mineral lease money would be able to invest some of it as a way of maximizing their resources under a bill that won unanimous approval in a House committee Wednesday.
The measure, introduced by Grand Junction Republican Yeulin Willett and Steamboat Springs Democrat Diane Mitsch Bush, comes before the Legislature at a time when royalty payments on federal lands are way down.
Federal mineral lease money comes from royalty payments on such things as grazing rights and oil and natural gas drilling. About half of that money goes to the state, which then distributes it to local governments based on the amount of federal land in their areas.
But because the federal government also was deducting money those communities received from payments the federal government makes to local communities in lieu of property taxes, some counties created special FML districts, including Mesa and Garfield counties.
Now, because of major reductions in drilling activities nationwide, those royalty payments have been in decline.
The measure, HB1151, would allow those districts to invest some of the money they do get in an effort to earn interest on it, ultimately making more available for local governments in their jurisdictions, Willett and Mitsch Bush said.
“Having the ability and desire to be able to invest FML money will be critical for these counties, for the small towns within them for certainty, for predictability for the future,” Mitsch Bush told the House Transportation & Energy Committee, which approved it on a bipartisan 13-0 vote.
“I think one of our witnesses put a bug in everyone’s ear,” Willett added. “Perhaps we ought to think about this in numerous places around the state, maybe the state itself on things like severance taxes as a way to grow that egg.”
Numerous witnesses from the Western Slope testified on the bill remotely from Colorado Mesa University, including Chris McAnany, general counsel for the Mesa County FML District.
“We really saw the need for this legislation because of a drop-off in mineral production,” he told the committee. “We started looking at ways that we could try to get more money into the community, and we saw that our investment vehicles were fairly limited under existing state law. This will give districts the option, but not the obligation to invest funds for the future.”
The bill heads to the full House for more debate.