© 2024 KVNF Public Radio
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Severance Taxes Critical To Colorado Communities

Laura Palmisano


Severance taxes are a vital source of funding for communities across Colorado. This tax applies to revenue the state collects from mining and energy extraction. Half of these funds go directly to communities affected by those activities. The other half goes towards grants for infrastructure and economic development.  

"We have just under a million gallons of hot, natural spring water that flows into the pool," said Patrick Rondinelli, the city administrator of Ouray, while visiting the city's hot springs pool. 

"There’s always been ponds in the early years that were in this location and then finally in the late 1920’s a formal swimming pool was built on this very site," he said.  "And, it’s been maintained in that condition in some variation. There’s been some changes made to it but basically in this same very site all these years."  

Rondinelli said Ouray closes the pool in the spring for about a week to clean it and do basic repairs. The site attracts about 135,000 visitors a year and is a major tourism draw for the small mountain community.

Ouray Hot Springs Pool
Credit Laura Palmisano / KVNF
Gary Hines of Grand Junction relaxes at the Ouray Hot Springs Pool. The city plans to renovate the pool with the help of a $200,000 grant through the state's severance tax program.

"We’re in desperate need to really upgrade this facility," he said. "The lifecycle of the existing pool and the existing bathhouse have come to an end."  

And, with the help of a $200,000 grant from the Department of Local Affairs, Ouray will develop a master plan to reconstruct the pool.

This grant is one of more than 500 DOLA gave out over the past two years, according to data from Rocky Mountain PBS I-News.

Rondinelli called these severance tax grants critical to Colorado communities.

"For a small community our size those costs to run for example a water system are just a much as they are in the bigger cities," he said. "We don’t have that tax base or that fee base that a lot of those other communities have so we really rely on those severance tax dollars to assist us."

On the Western Slope severance tax projects include funding for a new fire station in Ridgway, a school-based health clinic in Delta, water line repairs in Lake City, a shooting complex in Palisade, and a recreation center in Montrose. 

montrose recreation center
Credit KVNF / Laura Palmisano
Laura Palmisano
The Montrose Recreation District got a $1.9 million grant from DOLA to help build a recreation center.

"Tracking the whole history, it’s probably going on almost two decades of effort to bring a recreation center to Montrose," said Ken Sherbenou, the executive director of the Montrose Recreation District, at the groundbreaking celebration for the new center.

"It’s going to offer something for every age and interest," Sherbenou said. "It’s really going to make a great contribution to the quality of life in Montrose." 

DOLA gave the recreation district a $1.9 million grant to help build the facility.

However, these severance tax funds haven’t always been available. In 2009, the state froze the grant program for four year because of the recession. DOLA started giving out grants again in 2013.

Chantal Unfug, the program’s director, said communities that were hoping to get funding put projects on hold. She said once the grants started back up municipalities had to revise their plans.

"Local governments usually plan 4-6 years in advanced for budgeting for their capital construction," said Unfug. "So we are just now starting to see the demand coming back in these last six months. In fact, we are now having more than double the demand of the dollars."

Rondinelli said it was tough when the state suspended the program. And this year, lawmakers diverted $20 million away from severance tax revenues to cover gaps in the state budget.

"That was understandable during those recession years where they pulled a lot of money from the severance tax," he said. "They pulled over $150 million at that time." 

Ouray Hot Springs Pool
Credit Laura Palmisano / KVNF
Ouray officials estimate it could cost up to $6 million to renovate the city hot springs pool.

Rondinelli said now that the state is doing well it isn't fair to communities to continue to take those funds away.  

"It’s hard for us to understand when we're still suffering the impact of that recession and the lack of funding that was there then and trying to get all of those projects that have been delayed and put on the side caught up now and here were are seeing the funds pulled away again," he said.

Many state lawmakers said severance taxes brought in more revenue than expected. That’s why they said it makes sense to use a portion of that money to shore up other parts of the budget. However, that means there will be more competition for available funds.

Laura joined KVNF in 2014. She was the news director for two years and now works as a freelance reporter covering Colorado's Western Slope. Laura is an award-winning journalist with work recognized by the Society of Professional Journalists, Colorado Broadcasters Association, and RTDNA. In 2015, she was a fellow for the Institute for Justice & Journalism. Her fellowship project, a three-part series on the Karen refugee community in Delta, Colorado, received a regional Edward R. Murrow Award.
Related Content