Lawmakers try to protect severance tax
DENVER — Their bills are not expected to make it very far in the Colorado Legislature, but two Western Slope lawmakers want to protect severance tax revenue from being used for anything other than their intended purpose.
Revenue from the tax, assessed on nonrenewable natural resources taken out of the ground such as coal, oil and gas, is evenly split between local governments and the Colorado Department of Natural Resources.
Because the recession created billion-dollar revenue shortfalls to the state over the past several years, the Legislature and governor have dipped into some of that money to pay for other things, such as education, prisons and human services.
Western Slope communities don’t like that, so freshman Rep. Don Coram, R-Montrose, and Sen. Ellen Roberts, R-Durango, introduced nearly identical bills in the Colorado House and Senate barring that money from going to other programs.
Over the past two years, the Legislature diverted $10 million out of the Local Government Severance Tax Fund and $96 million in federal mineral-lease payments to other uses.
Additionally, former Gov. Bill Ritter proposed taking another $88 million in severance tax money to help balance this year’s budget and $42 million for next year.
So far, those transfers have been restricted to federal mineral-lease money and discretionary severance tax revenue, but the Western Slope lawmakers worry the rest of the Legislature might be tempted to dip into the millions in severance tax revenue that goes directly to local governments.
According to legislative revenue projections, next year the state expects to earn about $177 million in severance tax revenue and $144 million in lease payments, up from the $49 million in severance tax revenue and $122 million in federal mineral-lease payments the state brought in this year.
One of the measures, SB35, was introduced by Roberts and is to be heard Feb. 7. Coram’s measure, HB1123, is to go before a House committee next week.
Coram said he is hopeful one of the two measures will survive, but Kevin Bommer, legislative advocacy manager for the Colorado Municipal League, is less hopeful.
“We’re told this is not the year for these types of statutory changes,” Bommer said. “Given the temptation to siphon cash funds in down (revenue) years, this is precisely the year to prohibit cash-fund transfers from water projects and communities facing crippling, energy-related infrastructure costs.”
Gov. John Hickenlooper won’t say whether dipping into severance tax dollars is something he will consider. He said that while he understands local governments have uses for the funds, he questioned whether those priorities should trump bigger ones statewide, such as education or health care.
“That’s a classic hard decision to make because those counties depend on those funds,” the Democrat said.
“It’s a case of relative impact. As a state, we’re going to have to buck up and say, ‘This hurts, but it doesn’t hurt as much as this.’ Our filter for that has always been to protect the most vulnerable.”
Hickenlooper said he will release his proposed budget for the 2011–12 fiscal year, which begins July 1, in the next few weeks.