DENVER - A top-dollar campaign is being waged over a proposed tax on the state's top industry - gas and oil.
Gov. Bill Ritter is the lead proponent of a plan to eliminate an industry tax deduction - a plan that would raise $321 million in its first year for college scholarships, wildlife, renewable energy, roads and water projects.
Ritter has been making his case to college students around the state.
"It really is a fairness argument more than anything else," he told a group at Arapahoe Community College on Sept. 12.
The industry is doing well, he said - drilling permits have increased sevenfold since 1999 - but many stu dents see no hope of going to college because it's too expensive.
But the industry is fighting back with a $10 million campaign of television and newspaper ads. Ritter's group, too, is advertising on television and billboards.
State Sen. Jim Isgar, D-Hesperus, opposes the governor because Isgar thinks eliminating the tax deduction will hurt local governments in gas-producing areas. In La Plata County, the industry is by far the biggest property-tax payer.
By eliminating the property-tax deduction, Amendment 58 would put gas companies in the "awkward position" of perhaps opposing tax increases for local schools - money that they currently can deduct from their state tax bills, Isgar said.
Also, Isgar would rather see the money go straight to colleges, not to scholarships.
"I think we could have done a better job with how the money was spent," he said.
Amendment 58
What it does: The amendment eliminates a tax deduction that energy companies pay on their state severance tax bills. It also taxes many smaller gas and oil wells for the first time. The money will be split among several programs, with 60 percent going to college scholarships; 15 percent to wildlife habitat; 10 percent each to renewable energy and roads; and 5 percent to rural drinking water projects.
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What is the severance tax?: Energy companies pay a tax when they "sever" non-renewable resources from the ground. The tax is levied on gas, oil, coal, gold and molybdenum, although natural gas accounts for the large majority of the money collected.
Two deductions: Companies also pay local property taxes, and current law allows them to deduct seven-eighths of their property-tax payments from their state severance-tax bills. Amendment 58 would eliminate this credit, effectively raising taxes on the industry by $258 million in 2009-10, according to an analysis by the Legislature.
Companies also don't have to pay severance tax on "stripper wells" - gas wells that produce less than 90,000 cubic feet a day or oil wells that produce less than 15 barrels a day. Amendment 58 cuts these thresholds in half, raising industry taxes by $62 million next year. There are 780 stripper wells in La Plata County, according to the assessor's office.
Need-based scholarships: Students in families earning up to $102,000 would be eligible for scholarship money, with awards based on financial need.
Who's for it: Gov. Bill Ritter and an array of education and environmental groups.
Who's against it: Energy companies and many business and civic groups, including the Western Slope's Club 20.
Who's paying for the campaign: The Nature Conservancy has contributed $1.2 million, more than half the pro-58 campaign's budget. Energy companies have pooled nearly $10 million to fight it, including a $1 million contribution from BP.
Local opinion: The Montezuma County Commissioners oppose Amendment 58. La Plata County's staff is studying its local effects, and the commissioners might take a stand either for or against it at a meeting next month, said Assistant County Manager Jo-anne Spina.
