Proposed Initiative to Cut Severance Taxes for Towns with Bans

Municipalities that prohibit oil and gas drilling would be barred from receiving severance taxes if Coloradans approve a ballot initiative being pushed by Reps. Frank McNulty and Jerry Sonnenberg. Front Range cities including Boulder, Broomfield, Fort Collins, Lafayette and Longmont have voted in support of bans or moratoriums on oil and gas drilling.

If the initiative makes the November ballot and voters statewide support it, those cities could stand to lose out on some of the estimated $275 million in severance taxes state economists project could come next year from oil and gas drilling. “To us, this is a question of fairness,” McNulty said. “It puts the entire state at a disadvantage when these communities ban energy production. … It leads to a loss in revenue for other communities.”

The initiative coincides with an initiative being led by Local Control Colorado, which seeks to amend the state constitution to allow stricter local limits on oil and gas drilling. “This is just another scare tactic from an industry that believes they can operate above the law,” said a statewide organizer for Frack Free Colorado.

Severance taxes from oil and gas drilling in Colorado also fund programs administered by the Colorado Department of Local Affairs. The ballot initiative would also bar these communities from collecting grants doled out by Local Affairs. Boulder and Fort Collins receive direct distributions annually under Local Affairs’ program.

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