Severance Tax & FML
Debruce Severance Tax
Rep. Dan Thurlow, R-Grand Junction; Sen. Don Coram, R-Montrose
SB 17-267, which enterprised the hospital provider fee program, includes a compromise that lowered the TABOR cap by $200 million (and not a much larger reduction initially proposed). CML noted that the state would inevitably exceed the TABOR cap in the future, putting a bullseye on severance tax. Thanks to higher income tax receipts, the state will be pushed closer to its TABOR cap much faster than anticipated and may exceed the cap within the next three to four years. Despite low severance tax receipts, the revenue would be exposed if the state exceeds its TABOR cap and there is little faith that the state would leave it alone. A debrucing question, as proposed in HB 18-1201, would allow Colorado voters the option to decide if prior legislative intent for severance tax purpose and use should be respected and upheld. For local governments currently and historically impacted by energy extraction, this would ensure that revenues would continue to be available to mitigate the impacts and help communities continue to survive as Colorado’s natural resources extraction declines and even disappears from some areas. For the state (and also to the benefit of municipalities, counties, and their citizens), vital water infrastructure programs in DNR, as well as Tier I and Tier II programs and the Colorado Water Plan, would be able to have better certainty of annual funding as prioritized by the General Assembly. Debrucing would also allow additional budget flexibility for transportation, education, or other state priorities. The bill will not be heard until April 9.