DENVER – After a more than six-hour debate on a proposed $26 billion state budget, the Colorado Senate gave initial approval to raid $20 million from a severance-tax fund to pay for looming tax obligations.
Revenue is generated from production of minerals such as natural gas and oil. Because the state is facing constitutionally required taxpayer refunds as a result of the Taxpayer’s Bill of Rights, or TABOR, writers of the state budget thought to utilize severance-tax dollars to fulfill obligations.
“It’s a shame that the TABOR refund liability is taking all that money and sending it back to taxpayers rather than allowing that one-time occurrence of severing these minerals from the earth to be taxed and to produce benefits for the people of our state,” said Sen. Pat Steadman, D-Denver, a member of the Joint Budget Committee.
If the bill does not receive approval by the full Legislature, then lawmakers would need to pull the $20 million from somewhere else in the budget.
Critics, however, say the money is critical to rural Colorado. The dollars go to the Colorado Department of Natural Resources and the Colorado Department of Local Affairs for local-impact grants and wildlife conservation, among other needs.
The money assists with mitigating impacts to local communities as a result of natural-gas and oil development. Water projects are a key component of the tax dollars because of impacts from energy development.
“I don’t know how you could say that you want to do something for rural Colorado and then support Senate Bill 255,” Sen. Ellen Roberts, R-Durango, said of the proposal.
Gov. John Hickenlooper’s budget office actually had proposed pulling $47 million from the fund, but budget writers were able to shave some off of the original request. The severance fund was targeted because revenues are coming in higher than expected.
But critics of the proposal pointed out that the energy industry currently is experiencing volatile conditions.
“Entitlement is not what severance tax is to our towns,” Roberts said. “It is what the severance tax was set up to do.”