Almost $10 million coming to Garfield County governments
September 8, 2011
GLENWOOD SPRINGS – Area governments learned recently they should receive more than $9.8 million, all told, in fees for energy and mineral extraction activities within Garfield County.
The money, part of a $54.6 million distribution of federal funds through the Colorado Department of Local Affairs (DOLA), is derived from energy and mineral extraction statewide.
Colorado Gov. John Hickenlooper and DOLA director Reeves Brown announced the distribution on Sept. 1.
The money is meant to help local governments deal with the impacts of extractive industries in their midst, such as the ongoing natural gas drilling boom in Garfield County and other parts of the state.
Garfield County receives the lion’s share of the money distributed to governments within the county boundaries, although municipalities as well as area school districts also receive some portion of the funds.
But Garfield County is handling its share, more than $5.6 million in both severance tax revenues and mineral lease fees, somewhat differently this year. It will have the mineral lease portion of its share deposited directly into a specially created Federal Mineral Lease District account.
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In years past, the funds have been sent to the county and either used or placed in a specific oil and gas funds in the county’s budget.
The Federal Mineral Lease District, as it is known, was created this year in an effort to ensure that Garfield County is not shorted in the amount of federal funds it receives every year.
In years past, the mineral lease payments to the county have interfered with another system of federal payments, known as Payments In Lieu of Taxes or PILT, according to County Commissioner John Martin.
The PILT payments are the federal government’s way of providing funds to counties that contain large amounts of federal land, which is not subject to the property taxes that provide much of Garfield County’s revenues.
Under federal guidelines, according to Martin, Garfield County has lost as much as $300,000 to $400,000 per year from PILT payments that initially amounted to as much as $1.2 million for a given year.
The reason, Martin has explained, is that the U.S. Treasury takes into account what is known as a “prior year offset,” referring to federal mineral lease payments for, say, Bureau of Land Management lands used for gas drilling.
Payments in lease fees to the county for one year are subtracted from the following year’s PILT payments, Martin said.
But payments to the new district’s accounts are not subject to this kind of bureaucratic arithmetic, Martin said, meaning the seven Western Slope counties that have formed FML districts should get to keep every dollar they are owed in PILT and mineral lease payments.
The Federal Mineral Lease District is a work in progress, according to Martin and county attorney Andrew Gorgey, who discussed the issue at the Tuesday meeting of the Garfield Board of County Commissioners.
Both officials said technical issues have arisen concerning such matters as how often the money is to be distributed, and whether it can accumulate over time to become a sort of endowment fund for projects in different counties or towns.
While the Federal Mineral Lease District is presently limited to membership by counties, the state legislation that enabled creation of the districts allows for municipalities to join too.
The law also allows the formation of “regional” districts – made up of several counties and their constituent towns, which would then be eligible to apply for grants for expensive projects, according to Martin.
Gorgey said the mineral lease funds sent to Garfield County are not to be factored into the county’s budget deliberations for 2012.
“The entire point of this is to get this money out of county control,” he told commissioners.
The Federal Mineral Lease District board meets periodically, and its next meeting is to be at 9 a.m. on Wednesday, Sept. 14, at the Garfield County Administration Building, 108 Eighth St., Glenwood Springs.