DENVER—A bipartisan group of lawmakers introduced a bill Thursday to funnel an estimated $2.7 billion in federal energy revenue to higher education and oil and gas communities, saying it’s the best way to invest money from Colorado’s booming energy industry.
Lawmakers want to pass the proposal (Senate Bill 218) this year to cash in on the possibility of natural gas development on the Roan Plateau, which would provide a big windfall to the state’s share of federal royalty payments.
It’s not clear when development on the western Colorado landmark could begin. The Bureau of Land Management rejected Gov. Bill Ritter’s plan to phase in development of the Roan and has cleared some land for leasing. But three members of Colorado’s congressional delegation have vowed to push legislation upholding Ritter’s plan.
Ritter supports the energy money bill and his office estimates that the state will take in $2.7 billion in federal payments over the next decade, including money from drilling on the Roan. Ritter spokesman Evan Dreyer said the figure doesn’t include one-time bonus payments that would be paid once land is leased on the Roan. That could add several hundred million dollars more to the pot.
Ritter said the spending plan doesn’t mean the Roan has to be developed in a hurry. He has pushed for phased leasing on the Roan believing it will minimize the environmental impact and maximize the economic value to the state. The thinking is that the value of the gas will only go up, allowing the state to collect higher royalty payments over a longer period of time.
“That is a resource that is very important but it is also an area of the mountains that I think is very pristine and should be protected while we tap this resource,” Ritter said.
Oil and gas revenue is a bright spot in the state’s economy and backers say it could prevent future funding cuts for state colleges and universities, which is what happened after the 2001 recession. The money would be targeted at campus construction projects, but lawmakers could use the fund to cover day-to-day expenses during economic downturns.
“Higher education will no longer be the checkbook to backfill the budget,” Sen. Gail Schwartz, D-Snowmass, said of the bill.
But Republican backers don’t think there will be enough money in the next few years to protect higher education. Sen. Josh Penry, R-Fruita, a bill sponsor, said $20 million would flow into the higher education fund next year but the first $50 million will have to be spent on building and renovation projects. He doesn’t think there will be a real cushion to protect higher education funding until at least 2013.
The state plans to finance the construction projects and Rep. Bernie Buescher, D-Grand Junction, said only $13 million would have to be paid toward those obligations in the first two years.
Meanwhile, beyond the Capitol, education and conservation advocates are backing a ballot measure that would provide $120 million a year for higher education by increasing the amount of money energy companies pay through their state severance taxes.
Now, federal mineral lease dollars are distributed through a confusing flow chart that’s been compared to a plate of spaghetti and has lots of “spillovers” and “overflows” from one account to the next. The new proposed formula is streamlined and will get more money directly to communities where oil and gas is being developed on federal land, Sen. Jim Isgar, D-Hesperus said.
Currently, about half of the payments go to kindergarten through 12th grade schools, about 40 percent is used to make grants to communities and 10 percent is used for water conservation. Under the new plan, the state fund for K-12 schools would get $65 million in each of the next three years and then just get 4 percent increases after that. Higher education would share in the expected growth in the energy money, gradually getting more money as less is given to K-12 schools for an estimated total of $671 million after 10 years.
Half of the 40 percent set aside for local grants would go directly to counties where oil and gas development is occurring on federal land rather than being mixed with severance tax revenue grants. Isgar said those counties don’t get any state tax dollars from that development and rely on the federal revenue.
