Curry proposes state ‘rainy day fund’ using mineral severance tax revenue
Post Independent Staff
Glenwood Springs, CO Colorado
DENVER, Colorado – State Rep. Kathleen Curry, I-Gunnison, believes Colorado needs to put aside more money annually for a “rainy day fund” to help the state weather economic slumps such as the current recession.
But she wants it to be accomplished as a constitutional amendment, rather than as a statute, which Curry said is “the only way to keep it from being raided every year by the Legislature.”
Curry, whose District 61 includes the Roaring Fork Valley and much of Garfield County, said on Monday that she plans to introduce a resolution on the matter in the House of Representatives this week, that would send the question to the state’s voters in November.
At the same time, she said, Senate Minority Leader Josh Penry, R-Grand Junction, will introduce the resolution in the Senate.
“I am sponsoring this measure because I believe that it is imperative that we start saving more money,” Curry wrote in her Legislative Newsletter of March 9.
According to Curry, the proposal is for the state to set aside $25 million per year from mineral severance tax revenues, but only during those years when the state would be receiving at least $50 million in severance tax income.
Curry said the state is expecting to receive as much as $180 million in severance taxes for the 2010-2011 budget year, twice as much as it took in for the 2009-2010 budget year. Had her proposed program been in effect, she continued, in each of the last two years year the $25 million set-aside would have gone into the Rainy Day Fund.
“The Legislature could access the Rainy Day Fund during economic downturns,” Curry stated, “and could use it as they see fit, if they can get a three-fifths majority vote of the members.”
She said the measure she is proposing would redistribute some of the severance tax payments, which are assessed against the value of minerals extracted by energy companies operating in Colorado.
She conceded that taking $25 million off the top of the severance tax revenues would mean “a reduction of $12.5 million each to the Department of Local Affairs and the Department of Natural Resources,” which each year divide the severance tax revenues.
DOLA then splits up its severance tax money, paying 30 percent to counties directly affected by oil and gas exploration, such as Garfield County, while 70 percent goes into a statewide grants fund.
The current form of a savings plan for the state, Curry explained, is a statue calling for 4 percent of the state’s general fund to be placed into reserve every year.
She said that in the past, that has put up to $400 million into the reserve, per year.
But, she continued, because it is a statute and not in the constitution, it can be modified every year, and over the past two years the reserve funding mechanism has been reduced to a 2 percent slice out of the general fund, even as the general fund itself has shrunk due to the ongoing recession.
As a result, she said, the state’s budget this year appropriates about $176 million into the reserves, and next year the expectation is for $285 million.
But if the state were putting away $25 million per year that the Legislature could not touch except in emergencies, she reasoned, in the next recession cycle Colorado would have more of a cushion to fall back on.
The Rainy Day Fund, she stressed, would be off-limits to the state government except in times of financial crisis, while the normal reserve-funding mechanism would remain in place and continue to be accessible to the Legislature.
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