Tapping Colorado’s natural gas reservoirs is paying off with $62 million in royalties that will find their way to the state’s cities, counties and schools.
In all, $8 million more in severance-tax and federal mineral- lease revenues flowed into the state during the 2012 fiscal year than in 2011, according to the state Department of Local Affairs, which then distributes money to local governments.
The growth in severance taxes and mineral lease funds reflects the value of the natural gas and liquids found in northwest Colorado’s Piceance Basin, as well as the natural gas and oil found in other parts of the state.
Both pots of funding come from production of natural gas and other commodities that are mined or drilled within Colorado.
Severance taxes are levied by the state on production, and producers pay the federal government to lease resources that underlay public lands.
Federal lease payments jumped more than 300 percent, from $7.5 million in 2008 to $32 million in 2012, and severance tax distributions to local governments from the state went up 8 percent, from $25 million in 2008 to $27 million in 2012.
These figures underscore the value of the energy industry to the state generally and to western Colorado in particular.
The distributions to local governments are intended to mitigate the consequences of extractive industries on the communities and regions that they affect.
It’s worth noting here that the U.S. Department of the Interior deducts the value of Colorado counties’ federal mineral lease revenues from the department’s payments in lieu of taxes, a practice that ultimately tends to undermine the value of the region’s federal lands. We’d like to see counties get full benefit from both programs, but that’s a side issue.
The fact is that severance tax and mineral lease money goes to building and maintaining roads, schools and other necessities, such as water and sewer lines.
The growth in these revenues shows that there is value in Colorado’s resources generally and in the natural gas and its byproducts that are pulled out of the Piceance Basin.
We hope that the value of those resources grows in the coming years both as a reflection of an economic recovery and as of greater production.