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State Severance Tax Trust Fund Allocation

Concerning severance tax revenue, and, in connection therewith, making an appropriation.
2021 Regular Session
Fiscal Policy & Taxes
Natural Resources & Environment
State Revenue & Budget
Bill Summary

Joint Budget Committee. Section 2 of the bill requires metropolitan districts created after July 1, 2021, to annually pay the state an amount equal to the total of all severance tax ad valorem credits claimed for property taxes that are imposed by the metropolitan district. This money will be allocated like severance tax revenues.Section 3 requires the director of the office of state planning and budgeting and the executive directors of the departments of revenue, natural resources, education, and local affairs, or their designees, to review and analyze the following elements of the state severance tax:

  • Data collection;
  • The tax structure;
  • Tax expenditures;
  • Taxes paid by industry to special districts;
  • Tax filing and process efficiencies; and
  • The allocation of the tax revenues.

The directors, or their designees, are required to establish a stakeholder group to assist their review and analysis. Based on this review and analysis, these persons are required to prepare written recommendations for any changes to the severance tax to the joint budget committee, to be submitted no later than January 1, 2022 December 15,2021. Prior to submittal of the written recommendations, the stakeholder group shall have an opportunity to review the draft recommendations and individual stakeholders may provide comments in response to the recommendations to be included as part of the recommendations.

Currently, 50% of state severance tax revenues are deposited into the severance tax trust fund, which is then typically split between the severance tax perpetual base fund (perpetual base fund) and the severance tax operational fund (operational fund). Money in the operational fund is currently used for core departmental programs and, if there are sufficient available revenues, for transfers to funds that support natural resources and energy grant programs (grant program transfers).

Sections 4 and 6 repeal the grant program transfers, with some, but not all, of the recipient programs receiving alternative funding from severance tax revenues. Subject to annual appropriation, section 5 authorizes the Colorado water conservation board to direct the state treasurer to transfer money from the perpetual base fund to the following cash funds that previously received grant program transfers:

  • The water supply reserve fund;
  • The interbasin compact committee operation fund; and
  • The water efficiency grant program cash fund.

The general assembly is also given the authority to directly appropriate or transfer money into the perpetual base fund and the water supply reserve fund.

If less than 100% of the money available in the operational fund is used for the current core programs, then, under section 4, the general assembly may also appropriate money from the operational fund to the following cash funds that previously received grant program transfers:

  • The species conservation trust fund;
  • The division of parks and wildlife aquatic nuisance species fund; and
  • The conservation district grant fund.

The transfers from the operational fund are subject to the same limits that they had as grant program transfers. On July 1, 2021, and July 1, 2022, the state treasurer is required to transfer $9,456,005, which is enough to fully fund the appropriations to these 3 cash funds for those fiscal years.

The operational fund reserve that was maintained for the grant program transfers is repealed and the remaining operational fund reserve is increased to be twice the current fiscal year's appropriations.

Sections 7 to 13 8 to 14 are conforming amendments related to the repeal of the grant program transfers, and in some instances, to reflect the new funding from severance tax revenues.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)




Bill Text