Colorado water plan loses out as severance tax funds decline
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Ryan Roberts. Photo courtesy Colorado Department of Corrections.

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DENVER - Colorado lawmakers are being forced to get creative when it comes to funding activities that rely on severance tax dollars, which have fallen by hundreds of millions over the last few years.

This year there just wasn't enough money in the coffers to fund the state water plan at $10 million, which it received last year. For the 2018-19 fiscal year, it's slated to receive only $7 million. The drop in funding comes just as the water plan's chief cheerleader, Gov. John Hickenlooper, is headed into the last eight months of his term in office.

Severance taxes are paid by oil and gas and mineral companies when they take those resources out of the land, known as severing. Those revenues pay for some of the divisions in the Department of Natural Resources (DNR), including the Colorado Oil and Gas Conservation Commission (COGCC) and the Colorado Water Conservation Board (CWCB) and are known as Tier I funding.

Tier II dollars, which also come from severance taxes, pay for continuing projects such as water and agriculture-related programs, clean energy development, soil conservation, wildlife conservation, invasive species control and low-income energy assistance.

But the decline in severance tax revenues due to lower oil and gas activity, combined with the state losing a lawsuit filed by oil giant BP over property tax deductions, has wiped out a substantial portion of what the state has to fund those operational activities.

Up until 2014, severance taxes brought in as much as $300 million annually to the state coffers. Since then, however, due to the lawsuit and decline in activity, state severance tax revenues have dropped to $19.5 million in 2016-17, according to a December 2017 revenue forecast from the Office of State Planning and Budgeting.

Those revenues have recovered only slightly since then.

The Joint Budget Committee stepped in with a bill, House Bill 1338, to transfer just under $30 million in general fund dollars (income and sales tax) to ensure those DNR divisions and projects keep going. That bill is one of 17 bills, referred to as "orbitals," that go hand-in-hand with the Long Appropriations Bill, House Bill 1322. Orbitals are included to ensure sure the budget is balanced.

The House Appropriations Committee approved HB 1338 Tuesday morning, prior to the House breaking into its separate caucuses for a JBC presentation on the budget, and to determine what amendments would be offered when the House debates the Long Bill Wednesday.

What's left of the severance tax money will fund a variety of projects contained in Senate Bill 18, the annual CWCB projects bill. But with less money to work with, the water plan came out with less money than it got last year.

The $7 million for the water plan includes $3 million for storage work; $1 million for agriculture-water projects; another $1 million for grants that would put into action strategies for conservation, land use and drought planning; and $1.5 million for environmental and recreational projects. Who gets what will be decided by the board of directors for the CWCB.

The CWCB projects bill also includes $8 million to take care of "Republican River matters." Half of those dollars will go to Nebraska, due Dec. 31, to pay off a settlement for alleged violations of an interstate compact.

The Republican River has its headwaters in Eastern Colorado, between Wray and Burlington. The river is named for a branch of the Pawnee Indians. The river flows first from Colorado into Kansas at its northwestern border, then to Nebraska and back into Kansas.

Under a 1943 agreement between Colorado and its neighboring states, 49 percent of the river water goes to Nebraska, 40 percent to Kansas and 11 percent to Colorado.

Nebraska accused Colorado of taking more water out of the Republican than it was allowed, and that's led to years of lawsuits, some which also involved Kansas.

The other $4 million will help pay for projects in the Republican River basin. Body-justified

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