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January 18, 2013 - Center for Western Priorities

Rep. Ray Scott – looking out for gas drillers over communities

Colorado Rep. Ray Scott (R-Grand Junction) is at it again. The Western Slope legislator is proposing a new tax break for oil and gas drillers, and he’s cherry picking facts to justify it.

Rep. Scott says his bill, which isn’t available yet on the General Assembly’s website, would create a two-year “tax holiday” when drillers won’t have to pay severance taxes. In Colorado, a severance tax is imposed upon nonrenewable natural resources, like oil and gas, removed from the earth. These taxes provide a critical source of funding for local communities to help mitigate the impacts of drilling. The kinds of projects that are funded include – but are not limited to – water and sewer improvements, road improvements, construction/improvements to recreation centers, senior centers and other public facilities, fire protection buildings and equipment, and local government planning.

With local budgets already stretched, who knows how these crucial funds will be replaced if Rep. Scott takes them away.

What Rep. Scott isn’t saying is that gas drillers in Colorado already enjoy a favorable tax environment. According to nonpartisan Headwaters Economics, Colorado has a low effective tax rate on oil and gas compared to other states in the Rockies.

Rep. Scott claims he’s proposing this tax holiday because unemployment on the Western Slope is at 17 or 18 percent. The truth is that the highest unemployment for any county in Colorado, as of November 2012 – the most recent available data – is 11.4 percent. While 11 percent unemployment is cold comfort, Rep. Scott should use accurate data to make his case, rather than mislead the public.

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There has to be a better way to stimulate the Western Slope’s economy than shortchanging communities, and giving tax breaks to oil and gas companies. Unfortunately, Rep. Scott has a history of favorable treatment to gas companies. In 2011, he proposed a bill that would have added two more positions to the Colorado Oil and Gas Conservation Committee, and required that they be filled by oil and gas industry insiders. That bill died in committee, but this new action proves oil and gas companies, not Western Slope communities, are Rep. Scott’s first priority.