The gold dome on the Capitol in Denver.

Photo: CPR/Hart Van Denburg

Local governments are upset that state lawmakers might shift money from them to pay for tax refunds.

Normally, Colorado collects severance taxes from oil and gas companies on the minerals they extract. The state is supposed to send that money back to local governments to offset the impacts of energy development.

However the Legislature’s budget committee wants to hold on to $20 million worth of severance taxes next year to help cover taxpayer refunds. It's part of a larger debate over the proposed $26 billion budget for the fiscal year that begins in July. 

At a hearing on the proposal Monday, Kevin Bommer with the Colorado Municipal League complained the state has a long history of raiding severance taxes to make up for budget shortfalls, in bad years, and good.

But Democratic senator Pat Steadman, who’s on the budget committee, noted that a spike in severance tax revenues is one reason the state has to pay taxpayer refunds next year.

"So why shouldn’t we look to it for a portion of the relief?" he asked. 

Rural lawmakers, especially, are unhappy with the severance tax transfer. However, members of the budget committee warn that without the money, the General Assembly will have to find $20 million to cut from some other part of the budget.