Date: 01/26/2006
Final
Local Affairs Presentation - Severance Tax
COMMITTEE ON JOINT FINANCE
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10:32 AM -- Presentation by the Department of Local Affairs on the Severance Tax
Ms. Barbara Kirkmeyer, Executive Director, Department of Local Affairs, presented information on the state severance tax. A copy of her presentation is provided as Attachment D. She discussed the statutory allocation of severance tax revenue. The money is required to be distributed to areas that are impacted by the development, processing, or energy conversion of minerals and mineral fuels. The money is used for the planning, construction, and maintenance of public facilities and for the provision of public services. She discussed severance tax revenue balances since 1995; revenue has increased considerably since FY 2003-04. She also explained the formula for distributing severance tax revenue. Fifty percent of the money is allocated to the State Severance Tax Fund and fifty percent is allocated to the Local Government Impact Fund. The Local Government Impact Grant Fund received the largest amount of revenue (41 percent). She also briefly discussed federal lease revenue received by the state. This revenue has also increased recently. Most of the lease revenue is distributed to the state's Permanent School Fund (52 percent).
Ms. Kirkmeyer continued by discussing the counties where severance tax revenue is generated. Most of the revenue is distributed back to the counties most impacted by the development, processing, or energy conversion of minerals and mineral fuels. There is mineral impact statewide, but some areas are more impacted than others. Weld, La Plata, and Moffat counties have received the most severance tax and federal mineral lease revenue since FY 1994-95. She also discussed the mineral impact grant program for local governments, including the guidelines for the program. A recent evaluation of the program found that the department was not implementing the local impact grant program according to the statute. The department is working on changing the program so that it is more aligned with state statute.
10:40 AM
Representative Vigil stated the need for the committees to understand how severance tax revenue is allocated under current law before it considers legislation this year that would use severance tax revenue.