As news circulates about vast oil and gas reserves across the Front Range, it’s easy to envision the economic benefits of a drilling boom.
But we can’t help but wonder whether impacted communities will get the full, promised government support to build roads, schools and other infrastructure made necessary by an energy boom.
If recent history is any guide, the answer would be no.
Colorado has a robust program that dedicates a good portion of severance tax colletions to a grant program that helps communities address the impacts of energy development.
However, it has been raided to varying degrees since 2008-09, its cash funds used to fill the shortfall in the state’s general fund.
In all, nearly $209 million has been or is proposed to be transferred from severance tax funds that were supposed to be awarded to local governments via a grant program. That’s according to the Colorado Municipal League, which pays close attention to these matters.
The Energy Impact Assistance Fund was designed to help local governments pay for schools, road and bridge construction, wastewater treatment plants and other things made necessary by increased energy development.
Unfortunately, the grant program was suspended in 2010.
It would be easy to beat up state lawmakers for approving budgets that swept up this cash. But the truth is, there are few choices — none of them good — when it comes to balancing the state budget.
Do you take money out of higher education, which has been ravaged in the economic downturn?
Or squeeze some more out of K-12 education, with the knowledge there is only so far you can cut there without running up against Amendment 23, a state constitutional amendment that protects K-12 funding?
Or do you hope you can pinch a little more money from corrections without, heaven forbid, putting bad guys on the street who go on to endanger public safety?
As we said, there are few easy answers. And that conundrum is likely to get more problematic the longer the economic downturn continues and the more energy development activity ramps up.
Anadarko, a Houston-based energy company, estimates that reserves in Denver’s northern metro area are equivalent to 500 million to 1.5 billion barrels of oil and gas. A consultant told The Denver Post that could mean some $4 billion injected into the state’s economy. That will, of course, generate additional severance taxes, which an energy company pays when it extracts oil and gas.
State legislators should restore the energy assistance grant program, at least in part, so local governments have the resources to support this welcome economic activity.
