Legislature could lock up grant funds

City, county, hospital could see projects stall

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A legislative freeze on Energy and Mineral Impact Assistance funds means nearly $9 million destined for community projects -- including $285,000 in already approved grants for Craig and Moffat County -- are being withheld until the Legislature decides whether those funds are needed to balance the state budget.

Legislators on the state budget committee have asked officials with the Department of Local Affairs to hold the money -- derived from federal mineral lease revenues and energy industry severance taxes -- until the end of the legislative session. At that time it will be determined how those funds may be used to offset the state's budget deficit.

The effect that a legislative decision may have on those funds is not yet known.

"The question is not only whether it happens, it's to what extent it happens," said Bill Timmermeyer, director of local government services for the Department of Local Affairs (DOLA) -- the agency that administers the grant funds.

He said he feels the money will be used in the state budget but is not sure to what extent. There's a good chance, he said, that the funds will be used to bolster the state's non-existent, but statutorily required, TABOR reserves.

Associated Governments of Northwest Colorado is fighting the legality of the freeze.

Timmermeyer said the Legislature -- in its law-creating capacity -- is probably within its legal rights to withhold the money.

"It's up to the Legislature and its legal staff to figure that out," he said. "It may work out fine. We'll just wait and see."

Energy and Mineral Impact Assistance grants are awarded three times a year in April, August and December. DOLA was on the verge of sending award letters for the April grant cycle when the request to hold the funds was made.

That left both the city and county without anticipated funds. The city applied for, and was on the verge of being awarded $200,000 for water line improvements -- a project for which it had budgeted a $200,000 match.

According to City Manager Jim Ferree, the city can't even begin the project using those matching funds because if they are spent before the grant is actually awarded, they will

no longer be considered matching funds.

"If we don't get this grant, it'll take us twice as long to replace those lines," he said.

The county had applied for an $85,000 grant for software for the assessor's department. The department is currently leasing the software and will continue to do so until the money is released. It was a grant the county's director of administrative services Deb Murray felt they had a good chance of receiving.

"It looked pretty good," she said. "It looked definitely like it was a grant we were going to get."

Officials of the Memorial Hospital -- counting on a $500,000 to $1 million Energy Impact Grant -- say they are concerned about the freeze.

According to TMH Community Relations Director Pam Thompson, the hospital had planned to seek funds during the August grant cycle for the construction of a new hospital.

"I think those were funds we we're certainly looking toward receiving," she said. "Now we have to rethink how we will get our funding."

She said there are other funding sources the hospital can explore.

The Moffat County School District and recreation center steering committee could also seek grants this year, Murray said.

Ferree said he applied for $1.2 million for the construction of a recreation center. The committee is expected to review the application in July.

"With the recreation center, we'll be limited as to the amount of tax increases we can request from the public, so all grant monies we can get are necessary," Ferree said. "Otherwise, we'll have to scale down on what we build."

The continued loss of Energy Impact grant funds could have a crippling effect on Moffat County.

"Because so much of that grant money comes from this area, we really dip into it," Murray said.

Last year and a half, the county received nearly $1 million in Energy Impact funds. The city has been awarded $1,085,000 over the past five years.

"The loss (of Energy Impact funds) would definitely affect us because things are tight around here," Murray said. "Little by little this all affects us. I definitely see a reduction in capital projects and equipment purchases (if the funds are discontinued)."

The city and county use the funds exactly as they were intended, Ferree said.

"Most of our projects have been infrastructure and capital improvement that relate directly to the energy impact of '70s and '80s when the city doubled in population and, in many cases, not a lot of attention was put toward the infrastructure that was put in place," he said. "That's the reason those severance taxes are paid and certainly the reason that energy program was set up -- to alleviate some of the impacts from energy development."

Timmermeyer said that 10 days ago, the Legislature authorized the release of $1.4 million in funds for urgent projects affecting health and human safety.

Annual disbursements from the Department of Local Affairs vary depending on revenue. In the past three years, the mineral industry has been strong, Timmermeyer said.

Last year, the DOLA distributed a record $40 million. This year, Timmermeyer expects $25 million to be awarded in grants to Colorado communities.

Christina M. Currie can be reached at 824-7031, Ext. 210 or by e-mail at ccurrie@craigdailypress.com.

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