Moffat County Commission approves Colowyo severance tax deduction
In other action ...
During a special meeting Wednesday, the Moffat County Commission:
• Approved, 3-0, a $160,752 transfer of intergovernmental funds for April.
• Approved, 3-0, a storm water modification permit for the road and bridge department.
During a special meeting Wednesday, the Moffat County Commission approved a request that could have short and long-term financial ramifications.
Chris McCourt, Kurtis Blunt and Tonia Folks, of Colowyo Coal Company in Craig, initiated the meeting hoping to get the commission to sign off on a 4.5-percent reduction on the company’s severance taxes.
As a general rule, mining companies pay a 12.5-percent royalty rate on revenue earned from coal sales.
The money first goes to the federal government, which collects its 51-percent share, commissioner Tom Mathers said.
The remaining 49 percent is funneled back through the state to the county of origin in the form of grants and federal mineral lease dollars.
Federal mineral lease funds are subsequently shared among Moffat County’s taxing districts.
But companies can petition to reduce the 12.5-percent royalty rate when it becomes too costly to extract the resource.
“The South Taylor pit is a relatively new area for us opening in 2007,” McCourt said.
“We first applied for the reduction in 2009 when we began to experience adverse geologic conditions that are making extraction time consuming and ultimately more costly.”
The South Taylor pit straddles the border between Moffat and Rio Blanco counties, with approximately half of the reserve located in each county.
Rather than abandon the pit, Colowyo officials petitioned to have the severance taxes reduced in an effort to keep coal costs flat.
A reduction, commissioner Audrey Danner said, ultimately means less money coming back to the community.
“But without it, we’re going to have to increase the price of coal or abandon the pit altogether,” McCourt said.
“With the reduction we expect to be able to mine that pit until 2019, which means a long-term benefit of having our employees in the area buying groceries, eating in local restaurants and spending money.
“Our previous owners did not have a long-term plan.
Part of this plays into the idea of operating here for the next 30 to 40 years, which is the estimated life of Craig Station.”
Because the Taylor Pit minerals are federally owned, Colowyo first had to petition for the reduction to the Bureau of Land Management’s local and Washington, D.C., offices.
The request was initially filed in 2009. The BLM subsequently signed off on the request to begin in 2009 when the petition was first filed. It will sunset in 2015.
But before the royalty reduction could take effect, local officials needed to sign off on the agreement.
On Monday, McCourt, Blunt and Folks presented the reduction plan to the Rio Blanco County Commission.
Rio Blanco also approved the request.
The Moffat County Commissioners followed suit Wednesday, approving the reduction unanimously.
“I think this is really important and that’s why we agreed to this special meeting,” commissioner Tom Gray said.
“We also understand that the energy industry is experiencing increased regulations, so I’m for this to ensure Colowyo remains a long-term, viable player.”