Bill diverts energy tax revenue to rural colleges

Sen. Greg Brophy wants to stop the governor and the Colorado Legislature from dipping into any more severance tax revenue.

The Republican senator from the Eastern Plains wants instead to put excess money that does not go to the Department of Natural Resources or local governments into higher education, and then only to schools in rural areas.

“We ought not let the severance tax revenues morph into a slush fund that just gets frittered away in great years, and instead put in place a plan for it,” said Brophy, who introduced a bill into the Legislature to change how some of the money is allocated.

Severance taxes are levied on the extraction of minerals from the ground, such as oil, natural gas, coal and heavy metals.

Half of the revenue goes to the Department of Natural Resources, with half of that specifically for water projects in the state.

The half not going to the Department of Natural Resources is intended for local governments, particularly those most affected by extraction activities. Under the current formula, 30 percent of that half is distributed to local governments based on how many workers in those areas are in the production industry.

The remaining 70 percent is distributed in grants for specific local projects. It’s from this pool the state has taken several million dollars during the past few years to help balance its budget.

Brophy’s bill won’t change any of that.

His plan is to take severance tax revenue that exceeds $100 million in any one year and put it into a rural higher education trust fund.

That money would go to rural universities and colleges on a proportional basis, but half of the money each school gets every year would go into a separate trust account, so it can build an endowment fund to financially support those institutions for years to come.

Only select schools would share in that money, including Colorado Mesa University, Fort Lewis College, Colorado Mountain College and Western State College. Larger schools, such as the University of Colorado and Colorado State University, would not qualify for any of the money.

Brophy said the various funds each school would have could become substantial, but he warns it could take years to get there.

Though Colorado took in nearly $150 million in severance taxes last year, the state is only expected to get about $90 million this year.

The bill is to first be heard in the Senate Finance Committee, but it has not been scheduled for its first hearing.


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