Rifle mayor, CORE director call for closing energy tax gap | PostIndependent.com

Rifle mayor, CORE director call for closing energy tax gap

Dennis WebbGlenwood Springs, CO Colorado

Rifle’s mayor on Tuesday joined in a call to increase taxes on Colorado’s energy industry, which an analyst says paid $1.3 billion less in severance taxes over the last five years than it would have for the same amount of production in Wyoming.Participating by telephone in a press conference, Mayor Keith Lambert spoke in support of the conclusions of a new study by Randy Udall, director of the Community Office for Resource Efficiency, an Aspen-based nonprofit focusing on energy issues.Udall says Colorado collects about $1 million a day less than it would if it had a severance tax that is on par with neighboring states such as Wyoming and New Mexico. Instead, its tax effectively works out to 1.9 percent, about a third of what those states collect, largely because of exemptions and deductions that are allowed in Colorado.”The citizens of Colorado have to have the courage to ask these companies, to require these companies, to pay their fair share, which clearly right now they’re not,” Udall said.Udall said Colorado should be following the lead of states that create permanent trust funds from energy and mineral revenues so they continue to benefit after the resources have been depleted. Quite the opposite is happening in Colorado, said Elise Jones, executive director of the Colorado Environmental Coalition.”Unfortunately, Colorado is not providing even for this generation,” she said.Udall said Rifle is a good example of that, as the city that he said sits in the “bull’s-eye” of local energy development.Lambert said the city has projected infrastructure expenses of about $68 million over the next five years, and this year received severance tax and federal mineral lease revenues of $622,000.”That’s not anywhere near enough to address the needs that we have before us,” he said.A state legislative committee is studying how the state’s existing severance tax revenues are distributed, but Lambert fears more of those dollars will be siphoned off for uses other than addressing energy development impacts on communities.”We feel that the breaking up of the existing pool of money can only mean less for us,” he said.Colorado’s severance tax is 5 percent, but it allows companies to deduct county property taxes, a deduction that Udall says costs the state $200 million or more a year.Also, he said, three-quarters of the state’s wells pay no severance tax at all because they are so-called “stripper wells” that have marginal production. The state exempted the tax on these wells to encourage investment in them.”It made a lot of sense in the early 1990s when oil and gas was a marginal business in Colorado. It makes much less sense today (with high oil and gas prices), and we should adjust it for today’s realities,” Udall said.Udall said the severance tax’s rules allowed producers to extract $7 billion of oil and gas from Weld County from 2002-06, yet not pay a dime of severance taxes on that production in three of those years.Lambert said he would like to see Colorado consider eliminating the property tax deduction, and possibly consider raising the severance tax rate as well. Meg Collins, president of the Colorado Oil & Gas Association, said the industry “is paying its fair share in the state of Colorado.”The entire amount of taxes the industry pays in Colorado from all sources needs to be considered, rather than focusing just on the severance tax, she said.When it comes to property taxes, she added, the industry pays the highest percentage of assessed value of any industry in the state of Colorado, at 87.5 percent of actual value.Udall says that even when the industry’s total tax burden is considered, it still is paying half as much as it would be in adjoining states.Collins said Wyoming collects more tax revenues because its oil and gas production is higher.She said severance tax revenues in Colorado have been rising, and the focus needs to be on whether energy-producing areas are receiving enough of those revenues to deal with the impacts.Contact Dennis Webb: 384-9119dwebb@postindependent.comPost Independent, Glenwood Springs Colorado CO

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