Ritter gets behind severance tax initiative
By Ann Imse, Rocky Mountain News (Contact)
Published April 24, 2008 at 11 p.m.
Gov. Bill Ritter on Thursday ended the speculation about what he wants on the November ballot, throwing his weight behind a plan to bump up Colorado's revenues from oil and gas development and provide college scholarships for tens of thousands of undergraduates.
If the proposal is approved by voters in November, Ritter said it would raise at least $200 million annually.
Under the plan, 60 percent of the money would go to scholarships; 15 percent to roads and clean water projects in areas impacted by the energy boom; 15 percent for protecting wildlife, which is losing habitat to the drilling; and 10 percent for the development of clean energy sources.
The oil and gas industry quickly weighed in against the plan.
"Since when did raising tax create new jobs?" asked Meg Collins, president of the Colorado Oil and Gas Association. "It's awfully risky to raise taxes, particularly when it looks like the economy nationwide and in Colorado could be slipping toward a recession."
The severance tax is what the state collects for oil and gas permanently removed, or "severed," from its land. The proposal would raise Colorado's total effective taxes on the oil and gas industry from 5.7 percent to about 8 to 9 percent, according to the governor's office.
That is still lower than the 9.4 percent in New Mexico and 11.2 percent in Wyoming, but more than the 4.5 percent in Utah.
Ritter said oil and gas "are called nonrenewable resources for a reason." Therefore, he argued, taxes on those resources should be invested for the future, and the best investment is the state's students.
The plan would at least double the state's scholarship fund, said the governor, noting that he came from a family of 12 and needed scholarships himself to attend college and law school.
The ballot proposal eliminates a credit for property taxes that oil and gas companies now deduct from their severance tax bills. The state can only estimate how much the credit has cost it, and audits often result in higher taxes paid.
State Rep. Kathleen Curry, D-Gunnison, said the plan she helped develop will simplify collecting taxes on the industry.
Backers of the citizens initiative must gather 76,047 signatures to put it on the ballot.
Two-thirds of the state's 122,000 in-state undergraduates would meet the income eligibility for the new scholarships, according to the governor's spokesman, Evan Dreyer. Students also would need to have a 2.5 grade point average.
Beyond that, details of the scholarship plan were unavailable.
The governor did give one example of how it would work: A family with an adjusted gross income of $62,000 would qualify for a grant of $2,000, or 30 percent of the tuition at the University of Colorado at Colorado Springs.
Dreyer said the governor hopes the proposal will unite the various groups planning competing severance tax initiatives for the November ballot.
But higher education officials said the proposal won't help Colorado's serious shortage of funding for the colleges themselves, which caused CU to order a tuition and fee hike of $1,300 a year on Tuesday.
"Giving the students tuition (money) will help them, and that's a good thing to do, but it doesn't solve our problem," said Richard Krugman, dean of the University of Colorado School of Medicine. "It doesn't help us at all. I still have to pay the faculty; I'm still short in the base funding."
Bruce Benson, president of CU and an oilman hired to persuade the public to improve funding for higher education, was noticeably absent from Ritter's press conference.
Reached by telephone, Benson applauded the plan for scholarships as well as a separate proposal to use money from oil and gas leases on federal land in Colorado for higher education construction.
But, he added, "I don't see any operating money coming out of any of this, and that is what my worry is. You can build all the buildings you want but who's going to turn on the lights?"
Most Colorado oil and gas companies are enjoying robust profits and are rushing to drill more wells.
Requests for drilling permits are already more than 400 ahead of last year, which broke the record with 6,400 applications.
Major player EnCana Oil and Gas, however, said this week it is scaling back in Colorado due to proposed new environmental rules. But it says on its Web site that the Piceance Basin in Garfield County is its "fastest-growing and highest potential resource play in the U.S."
imsea@RockyMountainNews.com or 303-954-5438 Staff writers Myung Oak Kim and Gargi Chakrabarty contributed to this report.
Abolishing a tax credit
* What the plan would do: Raise the effective rate of severance tax by eliminating a credit for property taxes. It is expected to raise at least $200 million annually to be divided: 60 percent for undergraduate scholarships; 15 percent for wildlife protection; 15 percent for roads and clean water in the drilling regions; 10 percent for clean energy projects.
* Pros: The severance tax in Colorado is significantly lower than in New Mexico and Wyoming, though higher than in Utah. State officials say the tax pays for the loss of a finite resource and the money should be invested in Colorado's future: its students, clean energy and preservation of its environment.
* Cons: The industry says increasing taxes at a time when the economy is not doing well would not only dry up new investment but also eliminate jobs and leave the state economy even weaker.
* Status: Language of the initiative is due today; 76,047 signatures are needed to place it on November's ballot.
Other issues that voters might see
COLORADO HOUSING INVESTMENT FUND
* What it says: Amend the constitution to add a 4 percent tax to every real estate transaction in Colorado to pay for affordable housing.
* Pros: Ensures low-income people can afford a home.
* Cons: Adds a tax of $4,000 for every $100,000 of sales price, placing a burden on middle- and upper-class.
* Status: Petition submitted; Not yet approved to start collecting signatures.
STATE SALES TAX FOR SERVICES FOR INDIVIDUALS WITH DEVELOPMENTAL DISABILITIES
* What it says: Eliminate the waiting lists in Colorado for the developmentally disabled to receive state services by increasing the state sales tax rate by 0.2 percent, phased in over two years.
* Pros: Enables children and adults with developmental disabilities to receive help to be included in community life.
* Cons: Costs customers two cents on every $10 purchase.
* Status: Petitioners still must submit 76,047 valid signatures to get question on November's ballot.
RIGHT-TO-WORK
* What it says: Agreements requiring workers to pay for union representation would not be allowed in Colorado workplaces.
JUST CAUSE
*What it says: Employers would have to prove reasonable cause before firing workers.
COST-OF-LIVING INCREASES
* What it says: All employees would get pay increases tied to the inflation rate.
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April 25, 2008
7:06 a.m.
Suggest removal
polyglot writes:
I hope everyone is watching and will remember. In less than two short years Democrats in control has lend to significant new taxes and new spending. Ref C money is gone and now they want more. This is a learning moment. Dems think gov't generates jobs and revenue while Republicans understand that businesses create the jobs and money. The new taxes and union measures on the ballot will turn Colorado into one of the most unfriendly places to do business. Hopefully the Denver business community will remember soon and begin to fight. If they don't they have no one to blame but themselves.
April 25, 2008
7:21 a.m.
Suggest removal
Mike_In_Hartsel writes:
The Colorado State Legislature (controlled by the Democrats) is trying to CUT the state highway budget by 20% (RMN yesterday) because of a money crunch. That same legislature wants to raise taxes and give the money away in scholorships? Let them pay their own way to college. There is no "right" to a higher education. Public funding is not the answer when highway maintenence is being cut.
April 25, 2008
8:06 a.m.
Suggest removal
jmkratt writes:
Interesting use of grammar and punctuation from an individual so concerned with educating the masses and rejecting republican propaganda.
The reason permits are up is due to oil and gas efforts to get as many permits submitted prior to Ritter's reformed rules and regulations are imposed.
This article is filled with misinformation, which is what propaganda is, Froward. Thanks for playin'.
April 25, 2008
8:29 a.m.
Suggest removal
soccermom writes:
We took 3 family vacations in 27 years, drove used cars and cut a lot of things out of our budget. We were able to put 3 children through school without student loans. Our income was adequate enough to get by and still be able to save for retirement. Many families are not so lucky. Student loans aren't handouts, they are investments in our state and country's welfare. What better place to invest than in our children? This is not a general tax for everyone, it is a tax on an industry that made record profits last year and it will put our state on an even playing field with the severance tax that is taken in neighboring states. Even if there are fewer jobs in that industry we are creating a work force for new energy industries that will bring benefits to us in the long term.
April 25, 2008
8:39 a.m.
Suggest removal
concernedcowoman writes:
Well, for me, I am confused about how this state uses its money. One casino on television is saying that their taxes went to keeping and repairing historic places was where their money was going. Then in the same week, I saw a news report about a historic place that is not in good repair and they are having a hard time getting money to fix it. Where is the tax money for that site?
April 25, 2008
9:06 a.m.
Suggest removal
Nala writes:
Under the Colorado Housing Investment Fund there is an ERROR. It is not a 4% tax. It is a proposed 0.04% tax. So instead of $4,000 dollars for every $100,000 it is ACTUALLY $40.00 for every $100,000. This is a very modest measure for people of modest means that benefits us all.
April 25, 2008
9:46 a.m.
Suggest removal
timeandagain writes:
Big shock here! Ritter never met a tax he didn't like. What an imbecile!!!
April 25, 2008
11:08 a.m.
Suggest removal
katbaloo writes:
Let's get real. Average yearly college tuition and fees in Colorado is around $6000. The average yearly cost of child care ranges from $7000 to $9000 year.( Calculate 5 years/child x 8000 + $40,000). Who needs more help and can affect more people-- the working low-income or the few college students who will get the scholarships?
April 25, 2008
12:50 p.m.
Suggest removal
HolierThanThou writes:
Wealthy billionaires who are awash in cash from oil and gas gouging have the chutzpah to complain about taxes and just enough smarts to get idiots to do their complaining for them.
Oil, gas, and minerals are resources that belong to everyone. Those who rake in billions selling the stuff need to pay their fair share and quit sniveling about it.
Here's my alternative proposal: let's track how much they spend fighting the severance tax initiative and multiply that by one million. That would make a nice neat tax for them. We could pay for mass transportation, new bridges, universal healthcare, and provide a university education free to all who want one. That would be fair.
April 25, 2008
2:58 p.m.
Suggest removal
jmkratt writes:
Actually, no. Oil, gas, and mineral resources do not belong to everyone - before you start firing away at the billionaires read up on your rudimentary mineral law.
April 28, 2008
7:15 a.m.
Suggest removal
Houstongolfnut writes:
To HollerThanThou: WHAT IF...those oil, gas and minerals were found on YOUR PROPERTY? Would they still belong to everyone? I bet that in that case socialism would stop at your gate. And FYI, they already do pay lots of taxes. They are already being "punished" for their skill, risk taking and success.