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At the Governor’s Forum on Colorado Agriculture, Gov. John Hickenlooper (D) called for a referred measure from legislators this session in order to raise severance tax revenues from oil and gas as a way to pay for the state’s water plan.
If passed, the measure would be placed on November’s midterm ballot.
“I would urge the legislators who are here—I need each of you to push,” Hickenlooper told the audience. “We were already the lowest state in terms of the severance taxes that we collect,” he continued, pointing to neighboring states like Wyoming and New Mexico.
“[L]et’s get a fair tax rate in there and I think we need a referred measure on the ballot so the people can vote,” Hickenlooper said. He said the state could expect structural changes to the severance taxes in the future, and urged the oil and gas industry and the General Assembly to work together.
The governor described a “social contract” that oil and gas has with the state of Colorado as a reason for the industry to get on board with a severance tax adjustment.
“I don’t think if they [oil and gas] were presented properly would walk away from it,” Hickenlooper concluded.
“The bill is dead on arrival. There is simply no way Senate Republicans will support such a tax increase. The real question is why would a lame duck governor propose raising taxes on his way out the door?” Senate President pro tem Jerry Sonnenberg (R-Sterling) told Western Wire via email. Sonnenberg is also chair of the Senate Agriculture, Natural Resources, and Energy committee.
When Hickenlooper first suggested a severance tax hike or adjustment in the way the tax is charged last month, Sonnenberg said there was “no appetite” for altering the way the severance tax is collected, including rates that track oil and gas company revenues. “Absolutely not. I’m happy with the way we do it now,” he said.
Hickenlooper’s spokeswoman, Jacque Montgomery, told Western Wire via email that the comments expressed by the governor were his own, and that there are no specifics for a referred measure at this time.
“The comments were the Governor’s own thoughts on this. We don’t have a formal plan just yet. Happy to share if and when we do,” Montgomery wrote.
The extra monies collected from an adjusted severance tax would go to sustain the state’s water plan, according to Hickenlooper. The state’s portion of the plan is approximately $3 billion.
Severance tax revenues have also been tapped to cover budget shortfalls in previous recessions, with legislators redirecting $322 million over the last two recessions.
In January Hickenlooper explained his belief that oil and gas industry officials would not oppose higher severance taxes. Hickenlooper’s office did not respond to questions about industry support.
Earlier this month, the Colorado Oil and Gas Conservation Commission (COGCC) raised the mill levy on oil and gas production in the state to 1.1 mill to raise money for the commission’s duties, or $1 per $1,000 in assessed value. The hike is expected to raise an extra $4.8 million for COGCC, according to the Denver Business Journal.
The mill levy increase is intended to offset a recent decrease in severance tax collections. The unanimous COGCC vote was not opposed by industry.
“We applaud today’s decision to ensure that regulators have the resources needed to complete proper permitting reviews and to fulfill their responsibilities to provide proper oversight of energy projects across the state,” Tracee Bentley, Colorado Petroleum Council’s Executive Director, wrote in a statement.
