Legislative committee taking more time
Severance tax group explores 'consensus bill'
November 5, 2007
Denver — A special committee of the Colorado Legislature has been given more time to draft a bill that could lead to a new bonding authority for huge infrastructure projects in areas heavily impacted by energy development.
Thursday was to have been the final meeting of the Interim Committee on the Allocation of Severance Tax and Federal Mineral Lease Revenue, which has been looking into better ways to distribute the millions of dollars flowing into state coffers from an explosion in oil and gas exploration.
However, Sen. Gail Schwartz, D-Snowmass Village, said she got permission from legislative leadership to hold one more meeting Nov. 14 so a stakeholders’ group headed by Rep. Bernie Buescher, D-Grand Junction, could work on a so-called “consensus bill.”
“We are working toward some way to protect the existing flows that all of the various interests get out of (federal mineral lease) revenue,” Buescher said. “If we see growth as dramatic as some folks are describing, we can use some of that growth to meet the three objectives that the working group laid out.”
Buescher outlined the three goals as:
• Using some of the money for bonding;
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• Making sure more money is distributed to the communities most impacted by exploration and mineral development;
• Creating a permanent fund to support such things as the operations of higher education.
“Even those objectives are somewhat contradictory so there is some balance that needs to go on,” said Buescher, who also is the vice chair of the legislature’s Joint Budget Committee. “What a number of us have been working on is how to balance these things, and we’re just simply not there yet.”
County Road 5 in Rio Blanco County was again cited as an example of a project needing a massive infusion of funds to accommodate the invasion of trucks and other heavy equipment needed for drilling.
Craig City Councilman Terry Carwile, a member of the working group that advised the interim committee, said short-term fixes such as increasing a tax credit for developers who help mitigate impacts don’t address the bigger picture.
“The tax credit doesn’t even come close to meeting the need of some of the projects,” Carwile said. “One 10-mile road came in at a projected cost of $2.5 million per mile.”
The interim committee, however, did endorse three other bills that could go before the full legislature in January. Interim committee bills traditionally are given a higher chance of passage.
A major bill that changes the criteria for direct distributions from the Department of Local Affairs to energy-impacted communities was approved unanimously, but only after one of the more contentious provisions was deleted. It would have given the DOLA executive director the discretion to “supplant or supplement” the criteria if the new distribution formula doesn’t work.
“This section goes beyond clarification,” said Sen. Jim Isgar, D-Hesperus. “We’re putting a recommendation in statute but then saying the executive director can ignore or supplant it.”
Members of the working group said the provision was added to give the new criteria a chance to work.
“We were uncomfortable putting into statute how the distribution would take place because we haven’t taken this out for a test drive,” said Mesa County Commissioner Craig Meis.
Also endorsed by the committee were measures adding the Division of Wildlife and the Division of Parks and Recreation to the agencies within the Department of Natural Resources that will receive administrative funding from severance tax revenue; and a measure creating a new credit against severance taxes for producers who reach agreements with local governments to help pay for infrastructure needs.
Sen. Josh Penry, R-Grand Junction, noted the existing credit has not been used in 17 years.
“A lot of local governments think this is a tool that can help them and it isn’t working now,” said Penry. His proposal also caps the credit limit given any one developer a $1 million per year with a total cap of $5 million.
Thursday’s meeting was held against the backdrop of a Legislative Audit Committee report that criticized the lack of oversight of the grant program aimed at helping communities affected by mining and drilling.
DOLA Executive Director Susan Kirkpatrick said the audit strengthens her department’s commitment to creating a strategic plan to guide the grant-making process.
“This money is precious and can be frittered way with any party or interest, but it won’t happen if everyone comes together as part of a strategy,” she said. “It’s important to use the money strategically at this time of opportunity.”
Under current law, 50 percent lf all severance tax revenue goes to DOLA for distribution to local government entities.