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Newspaper Article

    Severance Tax Debate HEATs Up

    BY Brandon Johansson
    02/17/2006

    Local politicians say the state's severance tax money should stay on the Western Slope.

    Two Denver-based conservative activists last week presented a plan to redistribute severance tax funds to the rest of the state, but the proposal is drawing fire.

    The proposed amendment,

    called the Home Energy Adjustment Tax-Rebate, has raised the ire of politicians across the Western Slope, including some in Moffat County.

    Independence Institute Pre�--sident John Caldara and Beth Skinner, state director for Colorado Freedom Works, are the chief proponents of the measure.

    Caldara said he hopes to have the amendment on November's ballot.

    Energy companies pay severance taxes to the state for the energy they extract. The state collected $146 million from severance taxes in 2005, according to the Colorado Department of Local Affairs. A large part of that tax money is distributed to communities on the Western Slope, where most of the state's energy extraction occurs.

    Caldara and Skinner said the amendment is designed to prevent the state from getting a massive windfall because energy prices are on the rise.

    "If the state is going to benefit from this, so should Colorado families," Skinner said.

    But local leaders say the revenue from severance taxes, which is used in part to help small towns offset the costs of energy development, isn't a pot of gold waiting to be found by Front Range politicians.

    Moffat County Commis�--sioner Saed Tayyara said he understands that rising energy costs are a burden for families but that he thinks Caldara and Skinner are going about relieving that burden the wrong way.

    "I don't oppose helping the needy," Tayyara said. "I oppose the concept of the East Slope getting money from the West Slope."

    Under the current formula, half the money from severance taxes is given to the Department of Local Affairs, which gives the money back to local communities through grants and direct payments. The other half goes to the Department of Natural Res�--ources.

    In 2005, Moffat County received $86,000 in direct payments. Since 1995, the Dep�--artment of Local Affairs has given Moffat County entities about $11 million in energy-impact grants. Revenues from severance taxes partly fund those grants.

    The grants have paid for a variety of projects in the county, including the construction of the Boys and Girls Club of Craig and new equipment at The Memorial Hospital.

    The amendment would limit the state's severance tax revenues to 2005 levels, plus an allotment for population change and inflation. The rest of the money would be returned to taxpayers.

    Caldara said it isn't fair for the state to reap the benefits of rising energy prices while Colorado families deal with high heating bills.

    But Aron Diaz, the executive director of the Associated Governments of Northwest Colorado, said it isn't fair to people on the Western Slope to redistribute revenues from severance taxes to the rest of the state.

    "(Severance taxes) make sure these small towns don't get run over," Diaz said. "This is really an awful piece of legislation."

    The Associated Govern�--ments, which represents mun�--icipalities in five Northwest Colorado counties, hasn't tak�--en a position on the amendment, but Diaz said he plans to encourage the body to oppose it.

    The amendment is particularly dangerous to Northwest Colorado because it would restrict severance tax revenues to their 2005 levels, Diaz said.

    In 2005, there wasn't oil shale development in the region, but in the coming years, there will be, he said.

    "We're right on the verge of one of the largest energy booms on this side of the state, ever," Diaz said.

    Severance tax money would be needed to help local governments deal with the boom, he said.

    by Brandon Johansson on 2/17/06.