Inside Initiative 121, an industry-friendly measure to punish fracking-free zones
If a Colorado county or district does not allow gas or oil production within its jurisdiction, should it be given tax revenue produced in other areas of the state that allow these companies? No, says initiative 121, an industry-driven proposal that's one of several measures focusing on fracking that could wind up on the November 4 ballot, as outlined in our current cover story, "Frack Attack."
If the proposal makes it to the ballot -- and it's close to collecting the 84,000-plus approved signatures required -- here's what you'll see:
Shall there be a change to the Colorado Revised Statutes concerning the distribution of oil and gas revenues administered by the state, and, in connection therewith, prohibiting a local government that prohibits oil and gas production or development from receiving any oil and gas revenues administered by the state during the prohibition; providing for the proportional reduction of such oil and gas revenues distributed to a special district not having a prohibition based upon the extent the district's boundaries overlap with the boundaries of a local government having such a prohibition; and requiring those revenues be redistributed to other local governments that allow oil and gas production or development?
If Initiative 121 passes, local governments (including county, municipality, special district, other district or political subdivisions) that ban or prohibit oil and gas development will not eligible to receive state tax revenues that come from parts of the state that do not ban those activities. If the local government lifts its ban on oil and gas, its share of the tax revenue would be restored.
The initiative states that "oil and gas revenues" subject to this restriction include, but are not limited to, severance tax funds, federal mineral lease revenues, revenues from state lands, and any other state-administered funds or benefits derived from oil and gas activities.
Republican representatives Jerry Sonnenberg and Frank McNulty are the main creators of Initiative 121. Sonnenberg had previously tried to push 121 through the Colorado House as a bill.
He believes that the current way revenue from oil and gas companies is shared in the state is not fair to the counties that allow those companies to produce within their borders. "It's about allowing entities that allow oil and gas production to utilize the severance taxes from that production," he explains. "It's unfair for entities that prohibit energy production to have access to those severance taxes."
If 121 passes, the county and municipal governments that lose revenue would have options for raising more money, including hiking the sales tax rate. Or they could lift their ban on oil and gas activities, in which case their share from the state would be restored. But the initiative would ban these governments from circumventing the restrictions by receiving offsetting state revenues from other sources.
Initiative 121 is just one of many fracking-related proposals that could be on the November 4 ballot. Find out more about all the initiatives on the Colorado Secretary of State website.
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