Western Slope Round Up: Severance Tax is the Talk of the Town

Severance tax is just about the No. 1 topic among oil-and-gas boom communities’ political leaders on the Western Slope because in their opinion, it’s about the hundreds of millions of dollars of impacts on rural town infrastructure, with minimal state funds from severance tax revenues returning to help defray the costs. Photo Sharing and Video Hosting at Photobucket

The City of Rifle alone, which has almost doubled in size in less than 10 years, is looking at over $60 million dollars worth of water, sewer and road projects to keep up with the expanding population. The local school district has had to ask voters twice in five years to approve school bond issues to build new facilities.

Rio Blanco road repair estimates have almost doubled within a couple of years to $2 million dollars a mile. Money isn’t the only problem; road contractors are hard to find because there is no housing for their employees. Also, the energy industry’s demand on road-building material has caused prices to skyrocket.

Multiply those impacts across Craig, Grand Junction, from Montrose down to La Plata County and one begins to realize that while it’s great to have an economic boom from oil and gas development, it’s not paying for the boomtown effects on water, sewer, streets, cost of living, housing, air and water quality, and social services.

With this scenario in mind, no wonder over 60 people trekked to Club 20’s Energy Committee’s last meeting of the year, which was held last Thursday in Grand Junction. They came from Montrose County, Craig, Mesa County, Meeker, Garfield County; Colorado statesmen; representatives from Western Colorado Congress; the governor’s office; Club 20; the energy industry; congressional and U.S. senatorial offices; the media … to listen and discuss proposed 2008 severance tax revenue collection and distribution legislation.

Because from a Western Slope point of view, as so many say, “It’s our money first,” the pressure is on the handfull of Western Slope state representatives and senators to wrestle more millions of severance-tax revenues from the governor and their 90 colleagues under the Dome, who have special interests of their own, like higher education, transportation and health care. Severance-tax and federal mineral-lease revenues have added almost $1 billion to state coffers in the past five years.

Photo Sharing and Video Hosting at Photobucket Legislative bills designed to flow more of those revenues back to impacted communities have been proposed by state representatives Bernie Buescher (D-Grand Junction) and Kathleen Curry (D-Gunnison), as well as state senators Jack Taylor (R-Walden), Jim Isgar (D-Hesperus), Gail Schwartz (D-Snowmass Village) and Josh Penry (R-Grand Junction), but the bills were still in rough-draft form at the time of the meeting.

One legislative proposal suggested adjusting the severance-tax distribution formula under the direction of the Department of Local Affairs (DOLA), which would take monies away from Mesa County but send more to Rio Blanco.

Grumbles came from the audience. They not only want the severance-tax pie divided differently, they want a bigger pie.

Photo Sharing and Video Hosting at PhotobucketThe state’s got to address our impacts first,” Mesa County Commissioner Craig Meis demanded. “There’s issues in severance-tax distribution and collection, tax credits and computer systems. We  should lock legislators, royalty owners, Department of Revenue, industry … and everyone else up in a room until they come out with some answers.”

With the current severance-tax and federal mineral-lease collection and distribution structure, Curry noted that for every additional dollar to energy-impacted communities, another dollar will have to be taken out of another program like water projects or higher education.

“Whose ox gets gored?” she asked the audience. “And remember, the Western Slope delegation is a minority.”

Another legislative proposal was to give Colorado the bonding authority to help pay for immediate transportation needs like an additional I-70 interchange in Parachute or rebuilding Highway 13, the only major north-south roadway between Wyoming and Colorado on the Western Slope.

That suggestion didn’t sit well with the audience either. A Moffat County commissioner wasn’t eager to obligate future funds; a Rio Blanco commissioner said the state couldn’t borrow enough money to pay for immediate needs.

Photo Sharing and Video Hosting at PhotobucketDirector of the Associated Government of Northwest Colorado (AGNC), Aron Diaz, complained about possible legislation that would give more power to the DOLA director on the distribution of funds, suggesting that it would give one person too much power over the Western Slope.

“And don’t talk about raising the severance-tax rate unless the plan includes more funds going back to impacted areas,” Diaz told legislators.

Curry summed up the debate by challenging audience members to write up the language for proposed severance-tax legislation themselves and send it to her. “If you don’t like these ideas, tell me what you want,” she said.

The two-hour back-and-forth on severance tax didn’t yield any tangible results, Club 20 executive director Reeves Brown admitted. “But still people left the meeting believing the severance-tax discussion moved forward.”

Map of Western Slope from Club 20; Rep. Kathleen Curry and Sen. Josh Penry discuss proposed legislation; Mesa Commissioner Craig Meis; bottom photo, AGNC director Aron Diaz. Photos by Leslie Robinson

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Leslie Robinson

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