Audit: State failed to control energy, mineral grants |

Audit: State failed to control energy, mineral grants

Steven K. Paulson
The Associated Press
Aspen, CO Colorado

DENVER ” State officials failed to place adequate controls on grants provided to communities to compensate for energy and mineral extraction, including $750,000 that was improperly given to a nonprofit organization in Limon, state auditors said Monday.

The money was part of $404 million awarded in 1,400 energy and mineral impact grants from 2003 to 2007.

Susan Kirkpatrick, executive director of the Department of Local Affairs, said she doesn’t have the staff to properly monitor the programs. She said the department will ask for more money from the Legislature next year and she set up an agency watchdog in the department to implement audit findings.

“It’s a very big opportunity, but an awesome responsibility,” she told the Legislative Audit Committee.

An energy and mineral extraction tax committee is looking at policy changes after an audit earlier this year showed nearly 30 percent of oil and gas producers and 42 percent of royalty interest owners audited by the state got away without filing severance tax returns with a different department between 2002 and 2004.

Auditors said the state had to rely on producers to tell them how much oil and gas they produce because it doesn’t calibrate or witness the calibration of oil and gas production equipment.

Auditors said Monday they found a $30,000 grant to cover travel and salary on a rural development grant had ballooned to $575,000, with 90 percent of the money given in supplemental awards that bypassed an advisory committee that oversees the grants.

Another $30,000 in state tax revenue was given to the Colorado Rural Development Council, a nonprofit organization in Limon, instead of going to the town government as required by law. The cost eventually soared to $750,000.

Lawmakers called it an honest mistake.

Auditors found overpayments totaling $34,000, including a duplicate payment of $29,200; unallowable costs totaling $257,000 and insufficient documentation to account for $1.3 million in three separate grants.

They also found wide disparity in the way grants were given out across the state, with the northwest region getting the most ” 29 percent of the money available ” and the southern mountains getting the least, 14 percent, over a period that stretched from 2002 to 2006.

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