The Mesa County Federal Mineral Lease District is thinking globally by acting locally.
The district’s three-member board has inspired a bill that would give districts throughout the state investment authority, meaning they could put aside some of the money they receive from the Department of Local Affairs into a “permanent fund.”
It’s a good idea — provided there are enough safeguards to protect the public’s money — because it allows local boards to more fully embrace the spirit of directing a finite resource to its highest and best use.
Under the current arrangement, FML districts get a portion of the royalty payments the federal government receives from leases on federal lands. Those royalties are shared with the state, which then disperses them through DOLA grants to municipalities. Counties with FML districts receive their portion then award funds to local projects through an application process.
Because the districts have no authority to save and invest any of the funds they oversee, they essentially give it all away every year in small chunks. Make no mistake, this is a critical funding source for the groups that receive the money.
“The concept has always been to make investments that matter, to do things that matter to the folks of Mesa County,” said board member Craig Springer, a Grand Junction banking executive.
But a permanent fund would allow the district to set aside money that could accumulate over time and be tapped to make a major investment in a project with bigger impact. Or the fund could be used to backfill shrinking allotments when drilling activity diminishes.
“Every time a royalty is paid, it’s a one-time event,” said David Ludlam, the oil and gas industry representative on the board. “At some point, those royalties won’t be there, so why wouldn’t we as a local board try to find a way to take this finite resource and turn it into a permanent public good?”
The idea has support from the applicants who depend on the district’s grants, even though in the short term it might they won’t get as much money. But the district’s annual total has been shrinking anyway. It’s gone from about $1.6 million in 2014 to about $809,000 last year due to the drop-off in drilling.
The local board is pushing for the change it wants to see at the state level. If local districts prove that a permanent fund can be more impactful, perhaps the state may consider a similar arrangement with severance taxes.
“We’re wanting to exert leadership at the local level, I think, in some regard, to set an example of what state policy could and should look like,” Ludlam said. “From my perspective if our efforts resulted in the state coming up with some kind of way to create a permanent benefit for all citizens of the state using severance tax, I would be applauding.”
Rep. Yeulin Willett has taken the district’s idea and converted it to a bill, which is to be introduced this week. It would be limited to Federal Mineral Lease Districts.
Whether it succeeds, the local FML district board has initiated an important conversation. If the Trump era results in increased drilling on public lands, it will be important to save some of the proceeds for a rainy day.