Ritter-backed severance tax increase falls short
November 5, 2008
Denver — Gov. Bill Ritter’s effort to raise severance taxes on the state’s oil and gas industry to provide money for college scholarships and environmental initiatives was soundly defeated by a 3-to-2 ratio among voters.
Amendment 58 would have raised an additional $320 million each year in severance-tax revenues from the oil and gas industry by eliminating a tax credit.
“We were outspent by industry 2-to-1,” Ritter said while attending a crowded Democratic victory party at the Sheraton Denver Hotel. “We’ll go back to the drawing board … we’ll work with industry to see if we can find a common ground. Industry is at a place where they should pay more, like they do in Wyoming and New Mexico.”
The tax credit allows industry to deduct most of what it pays in local property taxes from severance taxes paid to the state. It is so substantial that companies operating in 25 of the state’s 30 oil and gas-producing counties paid no severance tax in recent years.
The failed amendment called for dividing new revenues this way: 60 percent to college scholarships, 15 percent to road and water projects, 15 percent for preservation of wildlife habitat and 10 percent to renewable energy.
Routt County voters bucked the overall state vote, narrowly supporting the measure.
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“It’s the right subject, wrong time,” said Sen. Chris Romer, D-Denver. “The lesson learned is that we need to do more direct investment in higher education. Unfortunately, scholarships didn’t bring us the business community.”
Both campaigns turned ugly in the weeks leading up to the election, with each side accusing the other of lying to voters.
The industry-backed campaign, Coloradans for a Stable Economy, set a record by pouring $11.5 million to fight the measure – all from oil giants such as Exxon Mobil, Chevron, BP, ConocoPhillips, EnCana and Williams.
The opposition ads called the measure “a tax on us” and a cost “pass-through” to consumers, warning that passing the measure would mean higher utility bills and pump prices.
Dan Hopkins, spokesman for Coloradans for a Stable Economy, was among the 100 people gathered at the Curtis Hotel to celebrate the measure’s defeat.
“They were able to afford millions of dollars in paid ads, too,” Hopkins said. “If they continue to rely on that as the reason that they lost, they really are not doing themselves any favor. They should look at the proposal, see why voters turned them down.”
Hopkins criticized a recent study that concluded Colorado’s total tax burden on the oil and gas industry at 6.2 percent was the lowest in the region, compared with Wyoming’s 15.9 percent and New Mexico’s 15 percent.