Colorado group: severance tax proposal may cut communities’ revenue

GRAND JUNCTION, Colo. ” A western Colorado lobbying group says a ballot proposal on mineral severance tax revenue could divert money from areas most affected by the state’s energy boom.

Club 20, which includes business and government leaders, says an analysis shows the proposal could reduce the revenue going to areas where energy development is occurring.

Parts of western Colorado are experiencing record rates of natural gas drilling.

The measure proposed for the November and backed by Gov. Bill Ritter would ask voters to end property-tax deductions for the oil and gas industry that allows producers to take a credit of up to 87.5 percent of the prior year’s property tax liability from their severance taxes.

Ritter said it would provide the state with about $200 million more a year from severance taxes.

Sixty percent of the money would go to college scholarships and the rest to affected communities, wildlife habitat and clean energy projects.

An analysis by Jim Evans, the former director of the Associated Governments of Northwest Colorado, said communities affected by energy development would have seen severance tax revenue increase in only one of the past six years if the proposal would have been in place.

Evans said local governments would have lost $23 million in 2006 and $45 million overall.

Severance taxes are imposed on such nonrenewable resources as oil and gas.

“It’s a raw deal any way you slice it,” said state Sen. Josh Penry, R-Grand Junction.

A spokesman for A Smarter Colorado, the organization backing the measure, said the finding wasn’t a surprise.

“It’s a group with ties to the oil and gas industry,” spokesman George Merritt said of Club 20.

Still, George Merritt said A Smarter Colorado would have liked a chance to make its case to the group.