Colorado Gov. Bill Ritter on Thursday said he will push for a ballot measure this November to levy higher severance taxes on oil and natural gas development to fund college scholarships and protect wildlife habitat. The initiative needs 76,047 registered voters’ signatures before it is put on the ballot.
The proposal, if enacted, would increase Colorado’s total effective taxes on the oil and gas industry to between 8% and 9%, up from the current 5.7%, according to the governor. The proposal would eliminate a credit for property taxes that energy companies now deduct from their severance tax bills. Colorado now estimates the property tax credit.
By comparison, Utah levies a 4.5% energy industry severance tax; New Mexico’s tax rate is 9.4%, and the tax rate in Wyoming is 11.2. If approved by Colorado voters in the fall, Ritter estimated the severance tax would raise at least $200 million a year. The state’s college scholarship fund, which would receive 60% of the fund, would at least double, Ritter said. Fifteen percent of the fund would be directed toward roads and clean water projects impacted by energy development, while another 15% would go to protect wildlife habitat and 10% would be used to develop clean energy sources.
Oil and natural gas “are called nonrenewable resources for a reason,” said Ritter. Taxes on the fossil fuels would offer an investment in the state’s students, who are the future, he added.
The Colorado Oil and Gas Association (COGA) said the proposal was risky.
“Since when did raising taxes create new jobs?” asked COGA President Meg Collins. “It’s awfully risky to raise taxes, particularly when it looks like the economy nationwide and in Colorado could be slipping toward a recession.”
Whether the higher severance tax would impact Colorado’s booming energy development is questionable. Just days ago EnCana Corp. suggested that Colorado’s more stringent regulatory environment could lead it to redeploy some of its exploration and production budget to other parts of North America (see Daily GPI, April 23).
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