Revenue from energy and mineral development in Colorado has reached historical highs, and we can safely assume it will only grow. That’s precisely why state officials need to get a better handle on how to administer that money.
A state audit this week found that state officials have failed to place adequate controls on the grants given to communities to compensate them for energy and mineral extraction.
Previous reports revealed that grant money was used for such things as a carousel museum in Burlington, a study of second-home ownership in Vail and improvements to ski training facilities in Steamboat.
Is that proper use of grant money? It sure doesn’t sound like it, but under the current system it’s hard to tell. The system lacks sufficient controls and guidelines for how the grants are awarded and spent.
The system needs to be changed.
In the latest report, auditors questioned supplemental grants that ended up changing the scope of projects already approved. In 2005, for instance, a local government received $490,000 to build a kitchen in the county jail. Less than a year later, as part of the kitchen project, they got another $500,000 to furnish other parts of the jail, even though the scope of the total project was never reviewed by the grant advisory committee.
Auditors also found, among other things, insufficient documentation to account for $1.3 million in three separate grants.
By law, grants are supposed to be prioritized for local governments that are “socially and economically impacted by energy and mineral development” and can go for a wide range of uses, including the construction and maintenance of public facilities. Some of the money is required to be used to mitigate the damage created by non-renewable resource development.
Because the procedures for distributing and monitoring the grants are inadequate, it’s unclear whether some of the grant uses are legitimate. It could be argued that a carousel museum and upgraded ski facilities constitute allowable economic development. But maybe not. They’re certainly questionable.
The agency that administers the grants doesn’t have the staff to properly monitor the programs, according to Susan Kirkpatrick, who heads the Department of Local Affairs. The audit covered grants from 2003 to early 2007, largely before the new administration took office.
Kirkpatrick plans to ask for more money from the legislature next year for staffing, and has set up an agency watchdog in the department to implement audit findings. Both appear to be prudent moves.
With the energy industry booming and the number of grants increasing, DOLA needs a more clear-cut process for awarding and monitoring grants. It needs clear standards and guidelines without political bias or conflicts of interest.
