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Commissioners discuss state severance taxes
11/2/2007 By: Carole McWilliams
La Plata County had to fight for a seat at the table to defend its interests in how oil and gas severance taxes are distributed, La Plata County Commissioner Kellie Hotter told Pine River Rotary Club members on Oct. 24.
She and commissioners Joelle Riddle and Wally White answered questions on an assortment of state and local issues.
“We were made aware in the summer that they were going to re-structure severance tax (distributions). We didn’t have a seat at the table,” Hotter said. “We fought hard and got a seat.”
In this case, “they” was a severance tax working group created by a state legislature interim committee. The working group made recommendations to the interim committee to be considered by the legislature in 2008.
Hotter said she spent four months on the working group. They arrived at a proposed distribution formula that is more equitable than the current one, she said. Thirty percent of severance tax revenue has been distributed according to the number of oil and gas workers living in the town or county.
“It was very skewed,” Hotter said. “We worked hard not to pit county against county. We analyzed different formulas. We looked at the state map of current distributions.”
The proposed new formula still includes resident industry employees, but it also includes production figures and drilling permits issued.
“That was a huge milestone to come away with that,” Hotter said. “At this point, that’s the most equitable way we could have done it.”
The chairman of the working group “was from Mesa County and they took the biggest hit from changing this formula, but it was the right thing to do,” Hotter said.
Another part of severance tax money is distributed by the State Department of Local Affairs (DOLA) for local community projects such as Bayfield’s sewer plant and new water storage tanks.
The committee’s “recommendations to re-structure that are the most exciting,” Hotter said. They will be divided into three tiers based on the amount of money being sought - for $200,000 and under, above $200,000 - about the same as now, and a new category for $10 to $15 million to address large, regional, multi-year projects.
“In the state, the focus was very much on northwest Colorado because of the projected 20,000 new wells,” Hotter said. Gas production in La Plata County has already peaked, but the county will have gas development for another 20 years or so, she said.
“The third tier can help. We can really think out of the box,” she said, mentioning rural water systems as an example.
Asked about funding for state colleges and universities, Hotter said the debate there is likely to center on federal mineral lease money paid to the state.
“Everyone is looking at that. It was too convoluted for us,” Hotter said. “We recommended the legislature appoint a task force just for that. We looked at adjoining states, what they do. It depends on your income tax, sales tax, how your schools are funded.”
Asked about the rural water system now proposed as a special tax district for the southeast part of the county, Wally White said the service plan still has to be approved by a District Court judge, who will set an election. He noted the first attempt to form a district didn’t get past the court stage. Hotter said the county commissioners supported exclusion requests submitted by the Oct. 5 deadline. “We hope it gets to a vote,” she said.
The commissioners also responded to questions about a new county fairgrounds, the search for a new county manager, and talk by Durango officials of having county residents help pay for a regional park in the Three Springs development near Mercy Medical Center.
White said the fairgrounds effort is currently on hold. “The (fairgrounds) task force brought us their report almost simultaneously with the announcement by the tribe” that they are going to totally renovate their Sky Ute Events Center.
“We are waiting until we get our strategic plan in a couple months,” White said. “I think we will scale it back. There’s no reason to compete with the tribe.” He noted that county and tribal representatives separately toured the same fairgrounds/ event center in San Angelo, Tex., to get ideas.
“But I want a county fairgrounds,” White said. He feels he’s not alone on that.
“I don’t think we’re all aligned on this,” commissioner Joelle Riddle said.
The commissioners didn’t think much of a Durango City Council proposal to ask county residents to help pay for a regional park in Three Springs, on grounds that many of the users will live outside town limits.
“Somebody is blowing wind,” White commented. Two-thirds of sales tax revenue in Durango is paid either by tourists or county residents who live outside city limits, he said.
“I don’t think (city councilors) had looked at it that way before,” Riddle said. “I pointed that out to one of their councilors. County residents feel they are paying for it.”
Hotter added, “I hope more vision and foresight goes into the fact that we are all on the same team.”