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401 Meeker St Delta CO 81416 970.874.4421

Paonia facing loss of severance dollars

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During her regular town manager's report at the May 24 board meeting, Jane Berry informed trustees that the town is facing potentially big cuts in its annual payment of severance tax and mineral leasing dollars.

The issue was one of many addressed at a recent meeting of the Colorado Municipal League. In the 2016 budget, the town estimates payments of $63,000 -- $29,000 in severance taxes and $34,000 in mineral leasing -- to the general fund this September. It probably won't be that much, said Berry, calling it "a huge issue across the state, and most certainly for the Western Slope."

Declines in severance tax and mineral leasing payments have cost the town's general fund about $100,000 over the last five years. "Not long ago we were getting $115,000, $120,000 per year," said Berry. This year, she said, "We'll be lucky if we get $45,000. We're going to get some portion of it, we just don't know how much."

In addition, said Berry, the regional manager with the Department of Local Affairs announced that the state has frozen its pool of grant money, which will affect its Energy Impact Assistance Program. Delta County is relying on those grants after recent local coal mine closures and the loss of numerous high-paying jobs related to coal mining.

The DOLA web page states that grant funds "have been 'frozen' (not taken) until further notice. This is a result of potential liabilities against the severance tax funds based on a Supreme Court ruling." The ruling has the state scrambling to pay hundreds of millions of dollars in refunds to the energy industry.

In addition, the Aug. 1 application deadline for Energy and Mineral Impact Assistance Fund grants has been delayed, said Berry. "I can't begin to tell you how many millions of dollars of infrastructure projects this affects in this state every year." Because of the dwindling severance tax and mineral leasing revenues, "The state is really hurting."

That fund has been lush in prior years, said Berry. The town most recently benefited from a $1 million energy impact assistance grant to help pay for its state-mandated water delivery system improvements.

Berry said the town won't know how big of a hit it will take until checks arrive in September.

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