DENVER—State economists predict a $210 million drop in severance taxes on oil and natural-gas production in the 2010 fiscal year that begins July 1.
The Colorado Legislative Council said the state is expected to receive $40 million in severance taxes in 2010, compared to $250 million this year.
The Department of Local Affairs attributes the decline to a drop in oil and natural gas prices. Severance taxes go to municipalities for capital projects to offset the impact of drilling and are paid for minerals taken from the ground.
The Denver Post reports the decline may affect capital construction projects and wildlife and environmental programs the taxes help fund.
“This is worse than we expected,” said Steve Colby, a DOLA research contractor.
Chip Taylor, director of legislative affairs at Colorado Counties Inc., said counties may have to look elsewhere for revenues or cut discretionary programs.
“If the projections turn out to be accurate, counties will continue to be in a fiscal pickle,” he said.
Rifle Mayor Keith Lambert, whose city uses severance taxes to improve infrastructure to accommodate energy development, said he didn’t expect such an extreme drop in revenues.
“It’s certainly not a heartwarming projection,” he said.
Rifle’s share of severance tax revenues had grown to $1 million in 2008, up from $405,831 in 2007. Although the city does not use the money to fund its day-to-day operations, the drop in revenues could mean a delay in construction projects to help traffic congestion and replace aging sewer and water lines.
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Information from: The Denver Post,
