DOLA Distributes $37 in Severance Tax and Federal Mineral Lease Revenue to Local Governments

DOLA Executive Director Susan Kirkpatrick has announced $37 million in annual state Severance Tax and Federal Mineral Lease Direct Distribution payments are being made to 506 Colorado counties, municipalities and school districts. The distribution comes from revenue from the Local Government Severance Tax Fund and Federal Mineral Lease Fund.

“These funds come at a critical time when many local governments and school districts are struggling to maintain quality services. This is a boost for local economies and allows local officials to decide where the funds are needed most,” said Kirkpatrick.

Ken Parsons, chairman of the Board of Rio Blanco County Commissioners and member of the State’s Energy and Mineral Impact Advisory Committee said, “This is an important source of funding for communities impacted by energy and mineral production. These funds help communities address the impacts of development, processing, or energy conversion on their infrastructure and capacity to improve the sustainability of their communities.”

The Colorado Department of Local Affairs distributes revenue derived from energy and mineral extraction statewide. These revenues come from state severance tax receipts and federal mineral lease non-bonus payments.

Last year’s distribution to Colorado communities was an unprecedented $80 million and in 2008 it was $32 million. This year’s distribution brings the dollar amount more in line with the historical trend characteristic of these funds. The decrease for 2010 is largely attributable to lower commodity prices, particularly natural gas.

The 2009 distribution was the result of high commodity prices as well as the passage of legislation in 2008 changing the distribution formula.

In 2008, the legislature passed SB08-218 and HB08-1083. This legislation established a new method and formula to determine the direct distribution of energy impact dollars from the severance tax and federal mineral leases. The 2010 annual distribution is the second conducted as directed by these two laws.

Prior to the passage of the 2008 legislation, direct distribution was based on the number of employees in the energy impacted communities in which they resided. The new legislation added the following factors: permits, production, employee residence, population and highway user miles (HUTF).

For a report listing distributions by local government recipients, go to:
http://dola.colorado.gov/directdistribution

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