Interim Committee Will Look at Coal Tax Funds Recovery

Rep. Kathleen Curry (D-Gunnison), vice-chair of the legislature’s interim committee on severance taxes, says that the committee plans to look into recovering the roughly $40 million coal severance taxes the state has failed to collect since 2000.

“That is definitely on our list of the sorts of things we need to clear up,” Curry says. “It’s kind of good government type work, to makes sure we are getting what we’re entitled to. That would be my goal there. I think that on the coal side, it’s time that we recovered those dollars.”

Attorney General John Suthers ruled in early July that the state Department of Revenue should have been raising the coal severance tax rate as required by law to adjust the rate for upward inflationary pressure. The department decided in 1992 to freeze the tax rate at 54 cents a ton, for fear of violating TABOR (Taxpayer Bill of Rights). The tax has remained at that rate for the last 15 years.

Whether the state can legally recover those back taxes is a yet-to-be-determined issue. Nate Strauch, spokesman for the attorney general’s office, said that the issue of recovering back taxes was not included in the original AG opinion.

Asked whether the state can recover the unpaid funds, Curry says:

“I don’t know. We were all wondering that. I don’t know if we have to get an additional legal opinion to figure that out. It would be worth looking into, though. We’d need to talk to the committee about it.”

Curry added, “I’d like to know what the state is really owed. We talk a lot about how the oil and gas industry has to pay what it owes the state. I don’t think it’s fair to let coal off the hook.”

Severance taxes from mineral production currently average about $200 million a year. The $40 million missed over about six years would represent a little less than four percent of the total. Under current law, half of the severance tax revenues are allocated to the budget of Department of Local Affairs, and one half to the Department of Natural Resources.

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