New law lets counties avoid penalty resulting from mineral-lease funds

A new Colorado law should help local counties keep from being penalized in dollars received from one federal program because of how much they get from another.

The measure lets counties establish special districts, separate from the counties themselves, to receive federal mineral-lease revenues. That would keep those funds from being deducted from what counties get from the federal payment-in-lieu of taxes program, known as PILT.

PILT allocations compensate local governments for lands in their jurisdictions that are federal, and thus not subject to property taxation. It’s adjusted for federal payments to governments the prior year for programs such as livestock grazing, logging and leasing of federal minerals.

Garfield County’s payment fell from $1.8 million in 2009 to $391,649 a year ago, and Mesa County’s fell from $2.27 million to $512,483, after both received millions in mineral-lease revenues in 2009.  The amount of the declines caught the counties off-guard and stemmed at least in part from an unintended consequence of 2008 legislation designed to streamline how federal mineral-lease revenues are distributed in Colorado.

Previously, some lease revenues were paid directly to counties and deducted from PILT payments, while the rest were distributed to them through the state Department of Local Affairs and were not deducted because they were considered state-prescribed distributions.

With the 2008 change, all of the money goes through Local Affairs, and the Department of Interior decided all of it should be deducted from PILT payments.

The resulting impact prompted officials to follow the lead of Utah, where special districts were formed to receive the lease funds and avoid the deductions.

Utah’s approach passed muster with the Interior Department. But John “Chip” Taylor of Colorado Counties Inc. said Interior Department attorneys haven’t given final approval to the similar approach provided for in the bill passed by the Colorado Legislature this year.

“We shouldn’t have too much of a problem” getting that approval, said Garfield County Commissioner John Martin, who helped state lawmakers draft the Colorado measure.

Garfield and Mesa counties have proceeded with creating special districts. Meanwhile, area counties have been talking about how the districts might cooperatively pool revenue sometimes for larger regional projects.

Taylor said one project that keeps coming up as possibly meriting such cooperation is work on Rio Blanco County Road 5, which is heavily used for natural gas development in the Piceance Basin.


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