Tuesday, December 19, 2006

Disposition of severance taxes Here's a nice rundown of the issues around the distribution of severance taxes and their future from Colorado Confidential. They write, "'Severance tax' may not a familiar phrase to most Coloradans, but by the time the 2007 Colorado legislature has wrapped up, many more will know of its significance. First of all, when severance tax collections for the state jump from $33 million to nearly $200 million in four years, it is not hard for any politician or special interest group to take notice. The Colorado severance tax is imposed upon nonrenewable natural resources that are removed from the earth. The tax is applied to gross oil (crude oil and condensate) and gas (natural gas, coalbed methane and carbon dioxide) income. Most of the increase in severance tax revenues in recent years has been from the explosion of natural gas drilling on the Western Slope, most particularly in the Piceance Creek area of Garfield and Rio Blanco counties. The revenues from the state severance tax collections are divided in half, with 50% of the funds going to the State Trust Fund and 50% to the Local Impact Fund. The Department of Natural Resources receives half of the State Trust Fund monies and the other half goes into a perpetual fund that loans money to Colorado Water Conservation projects. "The Local Impact Fund is divided accordingly: 85% goes to Department of Local Affairs grant projects and 15% is distributed directly to local governments affected by oil and gas impacts based upon the number of oil and gas workers living in that particular town or county. Most of the localities eligible for direct severance tax funds are in rural Western Slope areas such as Rio Blanco, Garfield, Montrose, Delta, Mesa, LaPlata and Moffat, among others. With county roads in disrepair from oil and gas truck traffic and municipal services and schools slammed by an influx of energy workers and their families, rural town mayors and county commissioners have been pressuring their state representatives to increase the direct assistance portion of the severance tax. Revenues from the 15% share are not covering the cost of impacts, Western Slope government officials have stressed." Category: Colorado Water 6:22:31 AM     Yampa River water to the Front Range? The Northern Water Conservancy has big plans to move water from the Yampa River to the Front Range, according to the Denver Post. From the article, "The Yampa River, one of the last Colorado rivers with water to be claimed, could provide more than 97 billion gallons a year to the Front Range, according to a new study. The Northern Colorado Water Conservancy District study found the $3.2 billion plan to withdraw Yampa water and send it through a 200-mile network of pipelines, pumps and reservoirs technically feasible. Ranchers, kayakers and northern Colorado municipalities have vowed to fight to keep the water in the Yampa River basin. "The Yampa is considered one the West's last wild rivers because it contains only a few small-scale impoundments. 'The Yampa River is a relic of the past; it's a dinosaur of a river because its relatively free-flowing,' said rafting guide Kent Vertrees. 'We've got to ask ourselves what value we place on that.' District officials say the project would divert water at Maybell - only taking water that is currently leaving the state. Maybell could be a viable location, officials said, because it's far enough downstream to minimize impacts on municipalities that use the river... "Northern officials say such a large project could benefit several Colorado river basins, including the beleaguered South Platte River basin, where up to 226,000 farmland acres are predicted to dry up by 2030. 'Because of the volume of water involved, even though the price tag for the project is large, the cost of the water per acre-foot is what folks are paying right now - and in some cases is much cheaper,' said Carl Brouwer, Northern's project manager. Northern water managers say they don't envision the district taking the lead on the project but do intend to shop the results around to interested Front Range cities in coming weeks... "One challenge facing the project is ensuring that withdrawals don't shortchange water users in the larger Colorado River basin, which studies predict has about 500,000 acre-feet, or 162 billion gallons, of unclaimed water left." Category: Colorado Water 6:10:33 AM

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