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Amendment 58:
Tax Increase — Severance Taxes on the Oil and Natural Gas Industry










Summary

The state legislature currently determines how severance tax revenue is spent. Severance tax is paid by companies that extract coal, natural gas and oil from Colorado soil. Amendment 58 proposes to eliminate a state sales tax credit for oil and gas companies, increases the number of oil and gas wells subject to tax, and changes the tax rate on oil and gas companies. These tax changes are estimated to increase state severance tax collections by $321 million in the 2010 budget year.

Currently, Colorado severance tax revenue is divided equally between state programs and local governments. Under Amendment 58, state programs and local governments would split 44 percent of the tax collections. The remaining 56 percent of the tax revenue would go to new uses including a college scholarship program (60 percent), acquiring and maintaining wildlife habitat (15 percent), renewable energy projects (10 percent), transportation projects in areas of the state impacted by the oil and gas industry (10 percent), and small community drinking water and wastewater treatment projects (5 percent). The remaining 10 percent of the tax revenue used for new programs would be placed in a reserve account for unspecified future use.

Severance tax collections fluctuate with energy prices and state programs and local governments could receive more or less money than currently anticipated.

Amendment 58 would provide scholarships to “lower and middle income” families, but no specifics of how these millions of dollars are distributed is given. The state board of education would be tasked to determine all the scholarship criteria. The measure also does not specify which “impacted” communities would receive transportation grants, or how water treatment grants would be spent, or which government entities or “nonprofit conservation organizations” would receive the wildlife habitat grants. 

According to the Colorado Legislative Council, both Amendment 52 and Amendment 58 would change how the state spends severance tax revenue, but each measure proposes different uses for the money. If both pass, the courts would have to decide how these conflicting measures take effect. Amendment 58, however, does increase taxes and Amendment 52 does not.


Position:  Neutral
Provided by: Legislative Council of the Colorado General Assembly
Amendment 58 proposes changing the Colorado statutes to:

  • increase the amount of state severance taxes paid by oil and natural gas companies, primarily by eliminating an existing state tax credit;

  • allocate the increased severance tax revenue to college scholarships for state residents, wildlife habitat, renewable energy projects, transportation projects in energy-impacted areas, and water treatment grants; and

  • exempt all oil and gas severance tax revenue from state and local spending limits.

Vote NO on Amendment 58 if:
  • You want to leave the severance tax funding the way it currently functions.
  • You believe that more than doubling taxes on oil and gas companies could negatively affect the state’s economy and its citizens.
  • You believe the spending plan for the new money is too vague and risky, and relies upon a volatile source of money.

Vote YES on Amendment 58 if:
  • You believe that taxes should be raised on the oil and gas industry.
  • You believe that providing more scholarships for middle and low-income students is critical to ensuring the state’s long-term economic health.
  • You believe this measure will help improve the state’s economy, environment and infrastructure. 

RMFC position:
VOTE XX
Vote NO
RMFC position:
Neutral