Modifications to Energy and Mineral Impact Assistance Fund - 2008
House Bill 08-1083
Governance and Direct Distribution of
Local Government Mineral Impact Assistance
1. Change in the composition and role of the Energy Impact Assistance Advisory Committee
2. Change in the guidelines, reporting and accountability on the distribution of the local government mineral impact assistance grants
3. Modification of the metrics used in the direct distribution payments to local governments
While maintaining the 70% - 30% split of severance tax receipts between the grants program and the direct distribution, the legislation makes five modifications to the direct distribution statute. The first application of the new language was for the direct distribution in August, 2009; using 30% of the DOLA 50% share of severance tax.
Each of these metrics is intended to capture a different part of the “life cycle” of impacts: the permits for the prospecting phase, the employee residence reports for the development phase, and the production for the production phase. Since the permits and production data do not provide sub-county detail, the new formula would operate in a two stage process. First a “county area allocation” would be made using the three metrics. Then, within each county, this “county area allocation” would be distributed to the towns and county on the basis of the employee residence report, population and the HUTF miles figures provided by CDOT.
The weighting of these factors is set in the first year at 50% ERR, 25% POP and 25% HUTF. Following years the weights must be at least 30%. The Employee Residence data is designated by mineral type. Then it is applied to the severance revenue by type to get a different payment per reported employee for each mineral type. Oil and gas paid $1,555 per reported employee last year while coal paid $468 and metals only $393.
The legislation requires specific guidelines and reporting: Construction of each index requires some technical policy decisions. Under the bill these types of issues would be brought before the Energy Impact Assistance Advisory Committee for resolution. The department will bring these policy issues to stakeholders and the Committee over the next six months.
4. Cleanup of inconsistent language in the federal mineral lease distribution formula
House Bill 08-1084
Colorado Severance Tax Credit
The state severance tax statute (CRS 39-29-107.5) provides for a credit against severance tax liability for contributions to public facilities made by severance taxpayers with new or expanded production. The purpose of this credit is to:
From 1980 to 1994 fifty five agreements were submitted for credit and forty were approved totaling $7.5 million. For a variety of reasons there have been no formal applications submitted since 1994.
To encourage use of this credit for local government project financing, the legislature passed House Bill 08-1084 which set up a Study Group that looked at two general topics:
Senate Bill 08-147
DOLA Impact Grant Assisted Building Projects Subject
to Energy Efficiency Standards
Requires DOLA impact grant assisted facility projects be designed, constructed, and renovated pursuant to a high performance standard certification program to achieve buildings energy efficiency standards.
Senate Bill 08-218
Allocation of Federal Mineral Lease
The legislation achieves the following four actions:
1. Separates out bonus and rents from the other federal lease revenues and splits these bonus revenues 50/50 between reserve funds for the local government metric based direct distribution and the higher education. The local direct distribution reserve fund from the bonuses may be used to backfill the local direct distributions from DOLA when state federal mineral lease receipts decline more than 10%. The higher education reserve serves a similar function.
2. Allocates the non-bonus revenues at follows:
3. The spillover from the caps on K-12 education, Colorado Water Conservation Board (CWCB) and the school districts go to fund higher education.
4. The direct distribution from DOLA is made in August of each year to county areas on the basis of a metric composed of the amounts of federal mineral lease revenue generated in the “county-of-origin” (COO) and the employee residence reports collected under HB-08-1083 Within each county this “county area allocation” would be distributed to the towns and county on the basis of the employee residence report, population and the HUTF miles figures provided by the Colorado Department of Transportation. The weighting of these factors is left to be determined by DOLA and the Impact Assistance Advisory Committee, with the exception that DOLA may accept a memorandum between county and its municipalities that directs an alternative allocation.