Amendment 58 -- Severance Taxes on the Oil and Natural Gas Industry

This would 1) eliminate a state tax credit thereby increasing the severance tax paid by companies that extract oil and natural gas, 2) increase the number of wells subject to the severance tax, 3) tax companies earning $300,000 a year at 5% but eliminate severance tax for companies earning less than $300,000, 4) not constrain future severance tax revenue to the TABOR collection or spending limitations, 5) allocate future severance tax revenue as follows: 22% state, 22% local, and 56% Stabilization Trust Fund (60% college Colorado Promise scholarships, 15% for wildlife habitat, 10% for energy efficiency and clean energy, 10% for transportation, 5% for drinking water and wastewater with a set-aside for a reserve account ). A portion of the Stabilization Trust Fund would consist of a reserve account presumably with the transfers eventually going to the recipients outlined above. The expected increase in collections is estimated to provide the existing revenue recipients (50% state programs and 50% local governments) with approximately the same revenue over the next 4 years.

STATUTORY Change

Amendment 52 and Amendment 58 have conflicting provisions on the allocation of severance tax revenue. If voters approve both amendments, Amendment 52 would presumably take precedence since it is a constitutional amendment.

Recommendation: yes
This amendment is an attempt to find more revenue for our state which has been squeezed financially since the economic downturn at the beginning of this decade. I would prefer that a large portion of the severance tax go to the general fund instead of more than half going to earmarks. The Blue Book draft analysis noted that Colorado has the lowest actual severance tax rate of the eight western states that are large oil and natural gas producers when exemptions, deductions, and credits are taken into account. This measure would raise the ranking to the third lowest.


Website for Yes side (A Smarter Colorado)
http://www.asmartercolorado.org/

Website for No side (Coloradans for a Stable Economy)
http://www.voteno58.com/


Amendment 58 (Approved ballot title below)

Severance Taxes on the Oil and Natural Gas Industry

SHALL STATE TAXES BE INCREASED $321.4 MILLION ANNUALLY BY AN AMENDMENT TO THE COLORADO REVISED STATUTES CONCERNING THE SEVERANCE TAX ON OIL AND GAS EXTRACTED IN THE STATE, AND, IN CONNECTION THEREWITH, FOR TAXABLE YEARS COMMENCING ON OR AFTER JANUARY 1, 2009, CHANGING THE TAX TO 5% OF TOTAL GROSS INCOME FROM THE SALE OF OIL AND GAS EXTRACTED IN THE STATE WHEN THE AMOUNT OF ANNUAL GROSS INCOME IS AT LEAST $300,000; ELIMINATING A CREDIT AGAINST THE SEVERANCE TAX FOR PROPERTY TAXES PAID BY OIL AND GAS PRODUCERS AND INTEREST OWNERS; REDUCING THE LEVEL OF PRODUCTION THAT QUALIFIES WELLS FOR AN EXEMPTION FROM THE TAX; EXEMPTING REVENUES FROM THE TAX AND RELATED INVESTMENT INCOME FROM STATE AND LOCAL GOVERNMENT SPENDING LIMITS; AND REQUIRING THE TAX REVENUES TO BE CREDITED AS FOLLOWS: (A) 22% TO THE SEVERANCE TAX TRUST FUND, (B) 22% TO THE LOCAL GOVERNMENT SEVERANCE TAX FUND, AND (C) 56% TO A NEW SEVERANCE TAX STABILIZATION TRUST FUND, OF WHICH 60% IS USED TO FUND SCHOLARSHIPS FOR COLORADO RESIDENTS ATTENDING STATE COLLEGES AND UNIVERSITIES, 15% TO FUND THE PRESERVATION OF NATIVE WILDLIFE HABITAT, 10% TO FUND RENEWABLE ENERGY AND ENERGY EFFICIENCY PROGRAMS, 10% TO FUND TRANSPORTATION PROJECTS IN COUNTIES AND MUNICIPALITIES IMPACTED BY THE SEVERANCE OF OIL AND GAS, AND 5% TO FUND COMMUNITY DRINKING WATER AND WASTEWATER TREATMENT GRANTS?

Yes ________________ No ________________


To see the full text of the proposed measure, click here, then click on “2008 State Ballot Information Booklet” at the top of the page.