Energy development in Colorado has been a boon – not just for the industries that are extracting natural gas and minerals, but for the state’s coffers.
The amount that Colorado collects from federal mineral leases and severance taxes is expected to shoot up to $334 million in fiscal year 2008 – almost double what’s been collected in recent years.
Over the last decade, the receipts have gone from a small, mostly overlooked revenue stream to one that is starting to get a lot of attention from Colorado legislators who are trying to figure out how to pay for the state’s most pressing needs.
As that debate begins, interested parties must come to the table willing to engage in a legitimate debate about funding needs and how to best leverage this money.
As it stands, the money is distributed via an arcane web of “cascades” developed in the 1980s. It’s a complex formula that includes tiers of recipients that get money only if the upper level is funded. Among the entities that share in this money are public schools, the Colorado Water Conservation Board, and counties situated in energy development areas.
Another beneficiary of the revenue stream is the Local Government Energy and Mineral Impact Assistance Program. It was created 30 years ago to help communities offset the impacts of energy development.
However, the program has gotten a lot of attention recently for expenditures that have arguably strayed from the original intent of the program. For instance, program money was used to help build a carousel museum in Burlington. But to be fair, many grants are awarded for what we see as legitimate needs, such as road and bridge projects in areas that are heavily impacted by energy industry.
The money that has been awarded through this program is not insignificant. Last year, it was $90 million. Another notable point about the fund is that its grants and loans are distributed by the state Department of Local Affairs and doesn’t go through the state’s budgetary process, leading some to see it as an administration slush fund.
Legislators need to address the process by which this growing pot of money is distributed. It is one of the many ways in which Colorado is hamstrung by a maze of conflicting mandates that hold down revenues, earmark funds and require specific budgetary increases.
The state’s elected officials need to have the discretion to set budgetary priorities and make decisions on how to spend its resources.
Certainly, we believe that some of the mineral lease and severance tax revenues ought to go to less affluent counties that are struggling to keep up with demands caused by energy development.
It’s only fair that the industries that cause deteriorating roads and other infrastructure needs pay for those needs.
But as this pot of money grows, Colorado ought to consider how to rationally apportion the excess after those costs are taken care of.
Any discussion about changing the matrix of how the money is doled out is going to be politically difficult. But as problems go, it’s one that a lot of states would like to have.
