Colorado towns with booming populations due to oil and gas development are getting an unfair share of state funding to cope with growth caused by mining and drilling, according to a report released Tuesday by the state auditor.
Those towns are getting far more money per worker when compared with areas facing similar growth problems due to coal and metal industries.
The disparity is a potential violation of the state law that created the “direct impact” program, which was supposed to help communities cover the extra costs caused by population booms.
“If the intent … is to acknowledge the impact on local communities from production employees who are residing in their jurisdictions, then the current practice of paying counties and municipalities at a different rate for oil and gas, coal and metals employees appears problematic,” the auditor reported.
The program is supposed to help communities pay for roads, housing, water and sewer systems, public safety and other government services.
According to the report, communities with oil and gas workers got $3,444 per worker in the 2006 fiscal year. Communities with coal workers got $481 per worker and metals workers’ towns were paid $403 per worker.
To explain the problem, the auditor compared “Town A,” which had 37 coal workers, 12 metals employees and 20 oil and gas workers, with “City B,” which had one metals worker and 65 oil and gas employees.
City B was paid $224,246 to cover the costs of the 66 workers in its community. Town A received $91,509 for its 69 total workers.
The auditor recommended that officials at the Colorado Department of Local Affairs (DOLA), which oversees the program, work with lawmakers, local governments and energy-industry officials to re-evaluate the program.
Sen. Jack Taylor, R-Steamboat Springs, warned that the existing system was carefully crafted after working with stakeholder groups, so officials should proceed carefully.
Susan Kirkpatrick, executive director of DOLA, said, “The stakes are high and the conversation will be lively.”
Any change to the existing formula could shift millions of dollars from communities with larger oil-and-gas-worker populations and into areas with coal and metals workers.
If the program were changed to a flat rate per employee, Garfield County, with 699 oil and gas workers, would be the biggest loser. That county would have received $656,100 less than the $2.4 million it got in 2006.
Delta County, with 445 coal workers, would be the biggest winner, getting $878,300 more than the $251,945 it collected.
The uneven payments to communities is the latest flaw exposed in the state’s handling of severance-tax dollars.
Earlier this month, The Denver Post examined about $380 million handled by DOLA in its Local Government Energy and Mineral Impact Assistance Program.
That money is distributed to communities based on the impact of the energy industry. Some of that money was used to fund a carousel museum in Burlington, a ski area in Steamboat Springs, a second-home study in Vail and road and house-number signs in Delta County.
The state auditor said it plans to release its own study of the program this fall.
Staff writer Mark P. Couch can be reached at 303-954-1794 or mcouch@denverpost.com.
“Direct impact” program
Payments to Colorado communities coping with population booms in the 2006 fiscal year
$3,444
For each oil and gas worker
$481
For each coal worker
$403
For each metals worker
Source: State auditor’s report
