Rural government officials and citizens in areas affected by oil and gas development have asked for an increase of grants from the Department of Local Affairs to help mitigate these impacts. In fact, Rep. Kathleen Curry (D-Gunnison) and Rep. Bernie Buescher (D-Grand Junction) are sponsoring HB-1139 that would increase DOLA support from 15% to 30% to these afflicted areas.
The new head of the Department of Local Affairs, Susan Kirkpatrick, does not support this bill and wants to keep the grant allocation to 15%, according to a Grand Junction Daily Sentinel article.
Susan Kirkpatrick, executive director of DOLA, said Wednesday she would rather not see lawmakers change how severance tax dollars are distributed to energy-affected communities for at least one year. Kirkpatrick, whose department distributes half of Colorado’s severance taxes, said her staff is still getting accustomed to the current severance tax distribution process.
“We have a brand new administration with Gov. Ritter and a whole new Cabinet,” Kirkpatrick said. “We are hoping to listen to the concerns that the representatives have and see if we could respond to those concerns within the current law. And then next year, at this time, if we’re not addressing their concerns satisfactorily, (we can) revisit the distribution formula.”
Buescher said Wednesday evening, following the House Finance Committee’s unanimous support of his bill, he remains committed to it. “I am 100 percent committed to getting this passed this year,” Buescher said.
Already, some Western Slope government officials have privately expressed concerns about how much Kirkpatrick, a former Ft. Collins mayor, understands Western Slope issues and a Ritter administration insider admitted that Kirkpatrick may be “over her head” in the DOLA position.
In a previous Colorado Confidential article, the breakdown of the severance tax allocation was explained:
With county roads in disrepair from oil and gas truck traffic and municipal services and schools slammed by an influx of energy workers and their families, rural town mayors and county commissioners have been pressuring their state representatives to increase the direct assistance portion of the severance tax. Revenues from the 15% share are not covering the cost of impacts, Western Slope government officials have stressed.
The Colorado severance tax is imposed upon nonrenewable natural resources that are removed from the earth. The tax is applied to gross oil (crude oil and condensate) and gas (natural gas, coalbed methane and carbon dioxide) income. Most of the increase in severance tax revenues in recent years has been from the explosion of natural gas drilling on the Western Slope, most particularly in the Piceance Creek area of Garfield and Rio Blanco counties.
The revenues from the state severance tax collections are divided in half, with 50% of the funds going to the State Trust Fund and 50% to the Local Impact Fund. The Department of Natural Resources receives half of the State Trust Fund monies and the other half goes into a perpetual fund that loans money to Colorado Water Conservation projects.
The Local Impact Fund is divided accordingly: 85% goes to Department of Local Affairs grant projects and 15% is distributed directly to local governments affected by oil and gas impacts based upon the number of oil and gas workers living in that particular town or county. Most of the localities eligible for direct severance tax funds are in rural Western Slope areas such as Rio Blanco, Garfield, Montrose, Delta, Mesa, LaPlata and Moffat, among others.
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