Across the country, a dispute is brewing over how much money federal and state governments should earn from energy development. But recently, Colorado counties found consensus on one aspect of that larger, contentious debate.
When companies drill for oil and gas, they pay fees including federal royalties, state severance taxes and local property taxes. If they seek federally owned minerals, they also pay a lease fee. Uncle Sam shares the lease money with affected states. Since 1995, Colorado’s share (third-highest after Wyoming and New Mexico) was about $494 million, most of which went to support our public schools. But about a quarter of the state’s share of federal lease money is distributed to local governments by the state Department of Local Affairs.
In October, the state attorney general warned that the department has been using the wrong method to decide which counties get how much of the federal lease money. For years, the department doled out the dollars based on where the leases were let, but the law says the funds should go where mineral industry employees live. Oil and gas workers often have trouble finding nearby housing, and frequently live in neighboring counties. The AG said counties’ share of lease money must be distributed “based solely upon the domicile of (mineral industry) employees.”
The opinion could have ignited a battle between the seven counties that used to get the lion’s share of the lease monies and the 40-plus counties that should share in the funds. For example, Garfield County got about $740,000 last year but under the new formula may get $497,000. Mesa County, where many energy employees who work in Garfield County live, got no money last year but now could get $458,000.
To avoid a feud among local governments, Barbara Kirkmeyer, acting director of the department that handles the funds, called a series of meetings involving county officials from around the state. In late January, in cooperation with the energy industry, the counties reached a workable deal to use payroll data to track the number of mineral industry workers in their communities.
The counties should be commended for their agreement. Given all the other concerns about energy development, local governments have other, bigger battles to fight.
