Regional group opposes severance tax increase

An organization of city and county governments in Northwest Colorado has launched a campaign against any proposed increases in severance taxes the group warms could harm a recovery in the energy sector in the region.

“For the first time in years, we are seeing a return of energy related activities on the West Slope. This fragile recovery promises increases in severance tax collections in the future, and we must not risk this return to prosperity by increasing effective tax rates on energy companies to balance the state’s budget,” said Marty Chazen, a member of the Grand Junction City Council who serves as chairman of the Associated Governments of Northwest Colorado.

Bonnie Petersen, executive director of the AGNC, said the group plans to work with state policy makers to oppose severance tax rates while promoting the use of severance tax revenues for what she said is their intended purpose — to offset the localized effects of energy production.

Mike Samson, a Garfield County commissioner, said Northwest Colorado must compete against other areas of the country for investments in energy development. “Energy companies are not our friends. They are not our enemies. They are our business partners,” Sampson said. “Northwest Colorado is beginning to see a slight recovery in the energy industry and we want to make sure that this recovery is not short-lived because of policies made at the state level.”

Ray Beck, a Moffat County commissioner, said energy production generates not only severance taxes, but also a variety of other tax revenues that benefit Western Colorado communities. “Raising taxes on our business community at this time is short-sighted, short-term thinking that might help legislators politically in the short term, but will exponentially hurt Western Colorado in the long term compared to the rest of Colorado.”

Jim Yellico, Garfield County assessor, said increased energy production would lead to increased tax revenues.

At current production levels, the 1.4 billion cubic feet of natural gas produced in the Piceance Basin in Western Colorado each day generates $69 million a year in severance tax revenues in Colorado, according to the AGNC. Increasing the tax rate 12 percent would produce $97 million in severance tax a year, but also potentially reduce production.

If natural gas production in the Piceance Basin were to increase an additional 1 billion cubic feet a day, however, severance tax revenues would in turn climb to $117 million annually.