Our View: Vote ‘no’ on 52 and 58
October 19, 2008
Steamboat Springs — Using severance tax revenues from the oil and gas industry to better fund crucial state programs makes sense, but neither Amendment 52 nor Amendment 58 get it right. Voters should reject both of the ballot measures.
Instead of earmarking severance-tax revenues for a few select programs, we’d prefer to see lawmakers hammer out a better proposal when they convene in January.
Severance taxes are imposed on companies that extract nonrenewable resources from the earth. Under current law, those revenues are divided equally between the state and local governments affected by extraction industries such as oil and gas. The state money typically is spent on water projects, wildlife conservation, low-income energy assistance programs and others.
Amendment 52 would change the state constitution to limit what the state spends in severance taxes to the previous year’s total plus inflation. The remainder of the state’s revenue would be dedicated to transportation projects, with a particular emphasis on reducing congestion on Interstate 70.
Amendment 52 would not change the severance-tax revenues allocated to local governments.
Let there be no doubt that transportation funding is a significant problem for Colorado. But taking severance-tax revenues away from a variety of other worthy programs and allocating half of it to I-70 isn’t worthy of inclusion in our state constitution. Our deteriorating transportation infrastructure has been well documented, and although I-70 plays a significant role in tourism and commerce, restricting a portion of severance-tax revenues to its improvement isn’t the best use of those funds.
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While Amendment 52 deals with reallocating severance-tax revenues, Amendment 58 would remove a significant tax credit for the oil and gas industry and stipulate how those additional revenues are spent.
We’re generally supportive of removing the tax credits; we just can’t throw our weight behind the proposed distribution of those dollars.
Colorado’s severance-tax rate is the lowest of the eight largest energy-producing Western states. Even if Amendment 58 passes and the tax credits currently enjoyed by the oil and gas industry are removed, Colorado still would have the third lowest severance-tax rate in the West.
It is estimated Amendment 58 would raise $321 million in additional revenues in 2010 alone. According to the measure, which would amend state statute and not the constitution, the additional revenues would be spent on college scholarships for low- and middle-income Coloradans, wildlife habitat preservation, renewable energy programs, transportation projects and water treatment projects. The majority, about 60 percent, would go to college scholarships.
They’re all worthy programs, no doubt. But in a state with a projected budget shortfall of $100 million for the current fiscal year, are citizens prepared to limit severance tax expenditures to a couple of narrowly defined causes?
Also concerning is that Amendment 58 opens the possibility of local governments and traditional state programs funded by severance tax revenues receiving less money in future years.
Furthermore, we’re wary of the politics behind the proposal. As previously mentioned, we’re open to increased severance taxes on the oil and gas industry, but we’d like to hear a bipartisan proposal hammered out through the legislative process, not one that will be decided based on TV commercials and mailers.
Vote “no” on amendments 52 and 58.