Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

Tapping oil, gas windfall

Ritter wants to dip into funds to end 'rainy day' dispute

By Chris Barge, Rocky Mountain News (Contact)

Published April 3, 2008 at 11:38 a.m.
Updated April 4, 2008 at 12:13 a.m.

Text size  
Rep. Bernie Buescher, D-Grand Junction, and Sen. Gail Schwartz, D-Snowmass Village, were all smiles as Gov. Bill Ritter spoke Thursday at the state Capitol.

Photo by George Kochaniec Jr. / The Rocky

Rep. Bernie Buescher, D-Grand Junction, and Sen. Gail Schwartz, D-Snowmass Village, were all smiles as Gov. Bill Ritter spoke Thursday at the state Capitol.

Related Stories

More Colorado Government

More stories »

Gov. Bill Ritter stood with a bipartisan group of lawmakers Thursday and said that proposed legislation divvying up $2.7 billion in oil and gas revenues over the next decade would douse the latest firestorm at the state Capitol.

Republicans are accusing Ritter and fellow Democrats of increasing state spending to the maximum allowed by law and derailing GOP efforts to set aside some money to deal with a possible recession.

Ritter said that SB 218, which was introduced Thursday, will create "rainy day and ongoing funds dedicated to higher education and local communities most impacted by oil and gas drilling in Colorado."

His announcement came nine days after declaring with similar fanfare that the same bill would rescue a science building on the Auraria campus and other higher education building projects that would have languished otherwise.

Accusations of politics

SB 218 co-sponsor Sen. Josh Penry, R-Grand Junction, expressed frustration along with other Republicans on Thursday that Ritter seemed to be using the legislation for political cover.

"It's a fig leaf for this administration and the Democrats not to make one single tough decision," Penry said.

But Ritter's budget director, Todd Saliman, said that while events over the past two weeks have helped jell support for the bill, it is only coincidental that the legislation could solve the state's recent predicaments.

Work on what became SB 218 began last summer, when a legislative panel sat down to figure out how to reallocate money from the oil and gas boom to better address some of the state's most pressing needs.

They decided to direct a large portion of the revenue increase away from K-12 education and into higher education.

Bill sponsors were in the midst of debating how exactly to direct the money two weeks ago, when new forecasts showed the state could expect far less revenue over the next few years. The Joint Budget Committee immediately took some building projects off the table.

One was an $111 million science building on the Auraria campus for which the state had already provided a third of the funding. A panic ensued, and higher education officials held a news conference in front of the hole where excavation for the building had begun to make their case for saving the project.

Economy a factor

The next day, Ritter announced that SB 218, in combination with another bill that would let the state take out $150 million in construction bonds, would fix the problem. The state could build the projects it scuttled after all.

One week later, SB 218 would come to Ritter's rescue again.

While both parties had talked for years about creating a rainy day fund, the looming recession helped Republicans pressure Democrats to do it. Senate Republicans came close to securing between $15 million and $30 million to create such a fund.

Penry approached Senate President Peter Groff, D-Denver, about the idea Tuesday. And by that afternoon, he, Sen. Mike Kopp, R-Littleton, and other senators were coming up with a plan in Groff's office.

Penry left that meeting early to meet with Saliman and SB 218 sponsors and iron out once and for all how to split up the oil and gas windfall. As he left Groff's office, Penry said it appeared that Groff was going to co-sponsor amendments to the budget's "long bill" that could create a rainy day account.

At the meeting with Saliman that afternoon, Penry and others convinced the administration to buy in to the spending formula they wanted. SB 218 would send a significant amount of the oil and gas money - at least $650 million over the next decade - into construction projects at colleges and universities.

It also would create permanent trust funds for higher education and local communities affected by drilling using a one-time royalties windfall worth hundreds of millions of dollars once the Roan Plateau was opened up for drilling.

Fuss as bill advances

Penry and others said that never at that meeting, nor in any of the meetings leading up to it, had anyone referred to those trust funds as "rainy day funds."

Republican senators raised a fuss Wednesday and Thursday as the budget bill went forward, insisting that the rainy day fund still was needed.

What SB 218 would do

Federal Mineral Lease revenues are projected to double over the next 10 years, from $165 million to $332 million per year.

The money comes from royalties the state receives from the federal government for energy development on federal lands inside the state.

SB 218 simplifies how that money is distributed, and diverts more than $650 million into higher education building construction projects that would have come as a windfall to K-12 education.

It still sends more than $700 million over the next 10 years to K-12 education. But that fund is frozen at current levels for the next three years, and then is directed to increase at 4 percent per year.

The bill directs more than $1 billion over the next 10 years to communities impacted by the drilling boom. And it funnels more than $150 million to the Colorado Water Conservation Board.

$30 million goes a long way . . .

Senate Republicans failed to get $30 million set aside in a "rainy day" fund.

What could the state get by spending $30 million instead of stashing it away?

* Operate and staff a large DMV office for 30 years.

* Replace 10 miles of a four-lane highway.

* House 1,496 inmates in a private prison for a year.

* Provide health coverage to 55,000 currently uninsured children by using the state money to get a $2-for-$1 matching federal grant.

Comments

  • April 3, 2008

    2:28 p.m.

    Suggest removal

    jdd2005 writes:

    I just want to know one thing.How is the state think that they are going to get all this funding from the oil and gas companies when the state is trying to bring in new legislation that is going to limit and make it hard for the Energy companies to drill in the piceance creek basin and the roan plateau and also state wide. I think the state need to think a little hard about this because it's going to come to the point the energy companies are going to pull out and the ones that do stay will most likey slow down the drilling thats is going on now because of the cost that the state has put on them.I work in the piceance Creek basin I see the problem the companies are already having and they are not geting any better. So I think the state will be lift holding a very empty bag and nobody to blame but themself .Just something for the state to thing about