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Severance tax proposals grow

Environmentalists may join fray with citizens initiative

By Chris Barge, Rocky Mountain News (Contact)

Published February 8, 2008 at 12:30 a.m.

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Voters could see three questions on the November ballot asking them what to do about severance taxes on the oil and gas industry.

A coalition of Colorado environmental groups may join the fray today by filing a citizen initiative that would hike severance taxes and shovel the money into habitat and wildlife protection and clean energy initiatives.

Theirs would be a political move, aimed at persuading Gov. Bill Ritter and Democratic lawmakers to use a tax hike to fund environmental causes instead of - or perhaps along with - higher education.

"Everyone is still kind of feeling out where everyone else is," said Elise Jones, executive director of the Colorado Environmental Coalition. "This is one way of being really clear on what we think is a good idea."

Rep. Kathleen Curry, D-Gunnison, is working with Ritter and others on a bill that would raise severance taxes by 2 percent to 3 percent. And while Curry has said there are compelling arguments for the environmentalists' case, she and Ritter both have signaled they are leaning toward putting most of the increased revenue toward higher education.

Some rural Republican lawmakers, meanwhile, have said they will organize a citizen initiative to get a competing measure on the ballot if the Democrats in charge of the legislature and governor's office try to raise severance taxes over their objections.

Sen. Josh Penry, R-Grand Junction, Sen. Greg Brophy, R-Wray, and Rep. Cory Gardner, R-Yuma, haven't provided details beyond saying the governor won't like their proposal.

"This is the new energy economy equivalent of a sin tax," Gardner said Thursday of the environmental groups' proposal. "Clearly, it shows division within the ranks of those who want to increase taxes on how to spend the windfall."

Oil and gas industry officials flatly oppose a severance tax increase.

The Colorado Environmental Coalition, Environment Colorado and Nature Conservancy are among the groups that are making the case to Ritter that there is a clearer nexus between severance taxes, which are levied on natural resources extracted from the land, and their cause than with severance taxes and higher education.

Ultimately, the groups would rather not face off against the governor with competing proposals on the ballot, Jones said. They would prefer to persuade him to get behind their idea.

"We're not filing it to start a war," Jones said. "We're filing it to start a conversation."

The details of the initiative - or even whether to file it - are still being fleshed out. Ideas in addition to a severance tax increase include asking voters to take away the property tax credit for the state's oil and gas industry.

Drillers in Colorado can credit 87.5 percent of property taxes they pay to their severance tax. In many cases, the credit was so large that producers in 25 of the state's 30 energy-producing counties paid no severance tax in recent years.

Taking away that credit, which would require voter approval, could have brought an extra $160 million to the state. Some experts say that number could reach as high as $300 million as the Western Slope's oil and gas boom continues.

Curry last month was considering asking voters to take away the property tax credit with her bill. But she told the Rocky on Monday that she has decided instead to go with a severance tax increase after protests from counties in her district that depend on those property taxes.

Curry said the 2 percent to 3 percent increase under consideration could bring in $150 million to $200 million.

bargec@RockyMountainNews.com or 303-954-5059

Target: Severance taxes

* A bill that would increase severance taxes by 2 to 3 percent is being drafted by Rep. Kathleen Curry, D-Gunnison, to raise an estimated $150 million to $200 million per year, probably for higher education. Gov. Bill Ritter has expressed interest in a severance tax hike to fund higher education.

* A ballot initiative to raise severance taxes or do away with the oil and gas industry's property tax credit may be filed as soon as today by a coalition of environmental and recreational groups. They want most of the $160 million raised to be used for wildlife and habitat preservation and clean energy initiatives.

* Three rural Republicans who oppose a severance tax hike have threatened to file their own citizen initiative if Ritter winds up backing either of the above proposals. They are short on details, but have said that the governor won't like their proposal.

Comments

  • February 8, 2008

    2:20 a.m.

    Suggest removal

    tesujidragon writes:

    Only 2-3 percent, some states charge as much as 11 percent. I bet they do not have any mitigating tax credits to reduce that percentage. All the money should be used to start a state trust fund. Then Colorado’s future will truly be bright. Argue about how to divide it later. But, until something is done, state lawmakers are giving Colorado away and not protecting the state citizens from big business. Millions of dollars of minerals leave the state every day. Eventually, it will be all used up. Let’s create something that will be good for Coloradans in perpetuity, as long as it is well managed.

    Chris Robbins

  • February 9, 2008

    10:15 a.m.

    Suggest removal

    rockiesfan05 writes:

    I hope Governor Ritter decides not to support the two severance tax proposals and raise taxes even more in Colorado. The oil and gas industry provides a great service to the State of Colorado, by providing thousands of jobs and bringing in billions of dollars in revenue. The legislators at the Capitol need to begin to listen to the people who elected them and not pursue their own personal legislative agenda.