Schools, towns may get energy tax funds

Burt Hubbard, Rocky Mountain News

Published October 9, 2007 at midnight

Text size

More Colorado Government

The state would infuse hundreds of millions of dollars from oil and gas production into higher education and communities reeling from the energy boom under a slew of newly drafted bills.

"I think there is a loose but real consensus that those are two areas where we can make a significant impact and should make a significant impact," said state Sen. Josh Penry, R-Fruita.

Other proposals that might advance to the legislature next year would use part of the state's severance tax and federal mineral leasing money to create a permanent fund for future needs and to divert money into state parks and wildlife projects.

The proposals are the result of hearings this summer and fall before an interim legislative committee on energy revenues.

The state is receiving more than $300 million a year from oil and gas production. The money comes from taxes on the value of the energy extracted from the ground and from the state's share of payments companies make to lease federal lands for drilling.

Five of the 17 bills would earmark money for higher education construction and maintenance.

Last week, the Colorado Commission on Higher Education voted to ask the state for $238 million for construction projects. The commission estimated the state's colleges and universities will need $3.7 billion during the next five years for construction and maintenance on their campuses.

One bill would use some of the federal mineral lease revenue to finance up to $250 million for state college and university building projects.

The same bill would create a new authority to oversee as much as $250 million of bond funding for roads, schools and other projects to ease the effects of the frenzy of drilling in Colorado.

Most of the new drilling is centered in northwest Colorado. Local officials have complained they don't have enough money for road repairs, to build affordable housing or to deal with crowded schools.

Several bills would guarantee the windfall from energy production couldn't be used for general state spending. Instead the money would be reserved for the long-term effects of oil and gas and mining.

"The central failure of our severance tax policy is we don't have a permanent fund," Penry said.

State Sen. Gail Schwartz, D- Snowmass, chairwoman of the interim legislative severance tax committee, has favored the creation of such a fund.

Other bills would change the state formula for distributing the money.

Currently, half of the money is used for grants and direct distributions to cities and counties, and the other half is spent on water loans and grants and to help finance the operations for four agencies in the state Department of Natural Resources.

The interim committee will meet this week to discuss the proposed bills.

Proposals

Some of the plans to change the way the state spends its severance taxes and federal leasing revenue from energy exploration:

• Create a special financing authority to use money from federal mineral leases and tax increases for housing, road and other projects in areas affected by the energy boom.

• Use federal mineral leasing revenue to pay up to $250 million of higher education construction and maintenance projects.

• Change the way the state allocates federal mineral lease and severance taxes to schools, higher education, local communities and water projects.

hubbardb@RockyMountainNews.com or 303-954-5107

Subscribe to the Rocky Mountain News