Amendment 58 opposition not about taxes
Conservatives say it raises revenue at local communities' expense
October 10, 2008
State Rep. Al White, R-Hayden, said he does not oppose Amendment 58 because it raises taxes on the energy industry.
White, who also is running for state Senate District 8 in the Nov. 4 general election, said he opposes Amendment 58 because it does not provide guaranteed benefits to local communities, but instead continues an adversarial relationship between the state of Colorado and oil and gas companies.
White is running against Democrat Ken Brenner, of Steamboat Springs, who has come out in favor of the amendment, which also is backed and sponsored by Democratic Gov. Bill Ritter.
Local conservatives have come out almost universally opposed to Amendment 58, which would eliminate an energy industry tax credit to raise revenue for the state.
White: Increase taxes
Energy companies are allowed to deduct their property taxes from their severance taxes, which they pay on natural resources harvested in Colorado and sold in another state. If approved, Amendment 58 would dispose of the tax credit.
The state raises about $214 million a year in severance taxes under the current system. Amendment 58 proponents say eliminating this credit would raise about $300 million more for the state each year.
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Raising revenue is good, White said, and probably won’t be too traumatic for energy companies. Colorado charges one of the lowest tax rates in the country for energy companies, and there is room for industry to contribute more, he said.
Communities within the state’s energy boom need more funding to keep up with road construction, road maintenance and other public projects, such as schools, to keep pace with growth, he added.
White favors some form of tax increase for the energy industry, but he thinks companies should be involved in discussing any changes.
“We need to find out what they can bear and talk to them about what we need,” White said.
However, he added, industry approval will not be necessary.
“If industry doesn’t want to cooperate, then I think we’ve got to run something without their cooperation,” White said. “Cities and counties in Colorado absolutely need more money. That’s not why I oppose” Amendment 58.
Severance taxes were created to fund infrastructure development in small communities. That is where the money should stay, White said. Amendment 58 turns that on its head and brings in large, statewide interests to feed off revenues.
More pigs at the trough
Severance taxes currently are split 50/50 between local communities and the Colorado Department of Natural Resources.
Amendment 58 would reduce the shares of both to 22 percent and set aside the rest for new project funds.
Two new funds are established specifically for local communities, with 5.6 percent for impacted roads and 2.8 percent for local water treatment projects.
The other 52.4 percent would fund higher education scholarships, wildlife habitat preservation and renewable energy programs.
Reeves Brown – executive director for Club 20, a Western Slope lobby group – said his organization opposes Amendment 58 primarily because of the way it brings in new interests, which he termed “pigs at the trough.”
Amendment 58 supporters say Brown and White’s assessments mischaracterize the ballot question.
George Merritt is the spokesman for the Amendment 58 campaign organization, A Smarter Colorado. He said the entire point behind the ballot question was to benefit Colorado communities and the state as a whole, knowing that Colorado is somewhat of a tax haven for energy companies.
“The philosophy behind this is very simple,” Merritt said. “We can make a $300 million investment in our state, or we can give a $300 million tax credit, a subsidy really, to the energy industry.”
Local communities will not “lose out” on their fair share, he added. Eliminating the energy industry tax credit will raise enough money that communities will receive more actual dollars than before, despite the percentage drop.
Brown said there is no way to promise local communities will have as much funding under Amendment 58 as they do now, because no one can guarantee severance tax revenues will continue to grow.
There’s no way to guarantee severance tax revenue won’t drop in any case, Merritt said.
“In any year, if severance tax revenues go down, the revenue goes down whether Amendment 58 passes or not,” Merritt said.
White said if Amendment 58 fails, as he thinks it should, he will not leave energy industry taxes alone. However, he will ask industry to be a part of the discussion, something he criticized Ritter for failing to do.
Although business has a natural desire to keep taxes low, the state does not have to make business an enemy, he said.
“If we’re going to write this thing, I’d like to give industry the opportunity to weigh in on the question,” White said, adding he would be surprised if energy companies were staunchly opposed to aiding the communities they work in.
“If they did that, it would surprise me because I think the oil and gas industry is very interested in being a good corporate neighbor,” he said.
Merritt said energy companies were not excluded from Amendment 58 discussions as White suggested.
“They were given an opportunity to discuss (the amendment before it was finalized) and they chose not to,” Merritt said.
He added that although some entities may feel slighted by not being intimately involved in the amendment’s writing, those concerns pale in comparison to Colorado’s need to invest in its future, which he said Amendment 58 does.
“This is our opportunity to invest in things this state needs,” he said.
Collin Smith can be reached at 875-1794 or email@example.com