C.R.S.
Section 39-29-108
Allocation of severance tax revenues
- definitions
- repeal
(1)
Except as provided in subsections (2) and (3) of this section, the total gross receipts realized from the severance taxes imposed on minerals and mineral fuels under the provisions of this article shall be credited as follows:(a)
For oil and gas, one hundred percent to the state general fund;(b)
For oil shale, forty percent to the state general fund, forty percent to the state severance tax trust fund created by section 39-29-109, and twenty percent to the local government severance tax fund created by section 39-29-110;(c)
For molybdenum, as follows:(I)
For fiscal years ending on or before June 30, 1979, seventy percent to the state general fund, twenty percent to the state severance tax trust fund created by section 39-29-109, and ten percent to the local government severance tax fund created by section 39-29-110;(II)
For the fiscal year ending June 30, 1980, sixty percent to the state general fund, thirty percent to the state severance tax trust fund created by section 39-29-109, and ten percent to the local government severance tax fund created by section 39-29-110;(III)
For the fiscal year ending June 30, 1981, fifty percent to the state general fund, forty percent to the state severance tax trust fund created by section 39-29-109, and ten percent to the local government severance tax fund created by section 39-29-110;(d)
For coal and metallic minerals, as follows:(I)
For fiscal years ending on or before June 30, 1979, forty percent to the state general fund, fifteen percent to the state severance tax trust fund created by section 39-29-109, and forty-five percent to the local government severance tax fund created by section 39-29-110;(II)
For the fiscal year ending June 30, 1980, thirty percent to the state general fund, twenty-five percent to the state severance tax trust fund created by section 39-29-109, and forty-five percent to the local government severance tax fund created by section 39-29-110;(III)
For the fiscal year ending June 30, 1981, twenty percent to the state general fund, thirty-five percent to the state severance tax trust fund created by section 39-29-109, and forty-five percent to the local government severance tax fund created by section 39-29-110.(2)
Intentionally left blank —Ed.(a)
Repealed.(b)
Except as set forth in subsections (2)(d) and (2)(e) of this section, of the total gross receipts realized from the severance taxes imposed on minerals and mineral fuels under the provisions of this article after June 30, 2017, fifty percent shall be credited to the state severance tax trust fund created by section 39-29-109, and fifty percent shall be credited to the local government severance tax fund created by section 39-29-110.(c)
Repealed.(d)
The state treasurer shall credit an amount of the increased coal tax that is attributable to the reduction or discontinuation of the exemption in section 39-29-106 (2)(b) and the credits in section 39-29-106 (3) and (4) to the just transition cash fund created in section 8-83-504 (1).(e)
Intentionally left blank —Ed.(I)
Except as provided in subsection (2)(e)(II) of this section, for the state fiscal years 2023-24 through 2026-27, the state treasurer shall credit the discrete increased amount of severance tax for oil and gas production that is attributable to the reduction of the credit against tax pursuant to section 39-29-105 (2)(b)(II) and 39-29-105 (2)(c) to the decarbonization tax credits administration cash fund created in section 24-38.5-120 (2).(II)
The state treasurer shall credit a portion of the discrete increased amount of severance tax for oil and gas production in the amount attributable to administrative costs to the respective cash funds so that all administrative costs are repaid to the respective cash funds on or before July 1, 2025.(III)
As used in this subsection (2)(e), unless the context otherwise requires:(A)
“Administrative costs” means the amount of money expended from the respective cash funds by the Colorado energy office and the department of revenue for the administration and implementation of certain income tax credits and a temporary specific ownership tax rate reduction for electric medium-duty and heavy-duty trucks that are part of a fleet as provided for in sections 24-38.5-116 (6)(b)(II), 24-38.5-118 (7)(d), 24-38.5-506 (2)(a)(II), and 25-7-1405 (2)(b).(B)
“Discrete increased amount of severance tax for oil and gas production” means the amount of tax collected that is attributable to a twelve and one-half percent reduction in the severance tax credit for oil and gas production set forth in section 39-29-105 (2)(b)(II) for tax years beginning on or after January 1, 2024, but before January 1, 2026, and a ten and nine hundred thirty-five thousandths percent reduction set forth in section 39-29-105 (2)(c) for tax years beginning on or after January 1, 2026, but before January 1, 2027.(C)
“Respective cash funds” means the industrial and manufacturing operations clean air grant program cash fund created in section 24-38.5-116 (6), the geothermal energy grant fund created in section 24-38.5-118 (7), the community access to electric bicycles cash fund created in section 24-38.5-506, or the electrifying school buses grant program cash fund created in section 25-7-1405.(2.5)
and (3) Repealed.(4)
Intentionally left blank —Ed.(a)
Notwithstanding any provisions of this section to the contrary, for the 1987-88, 1988-89, 1989-90, 1990-91, 1991-92, 1992-93, and 1993-94 fiscal years, those gross receipts realized from the severance taxes imposed on minerals and mineral fuels which would otherwise be credited to the state severance tax trust fund under the provisions of this section shall be credited to the state general fund.(b)
Notwithstanding any provisions of this section to the contrary, for the 1994-95 fiscal year, those gross receipts realized from the severance taxes imposed on minerals and mineral fuels which would otherwise be credited to the state severance tax trust fund under the provisions of this section shall be credited to the uranium mill tailings remedial action program fund created in section 39-29-116 (2); except that the amount credited to such fund during the 1994-95 fiscal year shall not exceed five million dollars. Any receipts in excess of five million dollars shall be credited to the state severance tax trust fund.(c)
Notwithstanding any provisions of this section to the contrary, for the 1995-96 and 1996-97 fiscal years, those gross receipts realized from the severance taxes imposed on minerals and mineral fuels which would otherwise be credited to the state severance tax trust fund under the provisions of this section shall be credited to the uranium mill tailings remedial action program fund created in section 39-29-116 (2); except that the amount credited to such fund during the 1995-96 and 1996-97 fiscal years shall not exceed two and one-half million dollars per fiscal year. Any receipts in excess of two and one-half million dollars shall be credited to the state severance tax trust fund.(5)
Intentionally left blank —Ed.(a)
To assist in the preparation of state budgets, the consensus revenue estimate group shall prepare a quarterly forecast of severance revenues, including price and production volume.(b)
As used in this subsection (5):(I)
“Consensus revenue estimate group” means the staff of the legislative council appointed pursuant to section 2-3-304, C.R.S., in consultation with the office of state planning and budgeting created in section 24-37-102, C.R.S.(II)
“Price insurance contract” means a written agreement between the state treasurer and a qualified counterparty relating to a commodity price for crude oil and natural gas based on levels of floor transactions or forward rate transactions executed through standard financial industry mechanisms.(III)
“Qualified counterparty” means a person whose long-term obligations are rated, at the time a price insurance contract is executed, in one of the two top rating categories of a nationally recognized rating agency.(IV)
“Severance revenues” means:(A)
The revenues generated from taxes levied pursuant to this article; and(B)
The state share of federal mineral leasing royalties received pursuant to section 34-63-102, C.R.S.(c)
Repealed.(6)
Repealed.(7)
Intentionally left blank —Ed.(a)
The director of the office of state planning and budgeting and the executive directors of the departments of revenue, natural resources, education, and local affairs, or their designees, shall, in consultation with the stakeholder group convened pursuant to subsection (7)(c) of this section, develop an implementation plan with recommendations to:(I)
Change the legal incidence of the state severance tax on oil and gas from interest owners to operators. At a minimum, the implementation plan must make recommendations related to:(A)
The legislative and administrative steps necessary to implement the change;(B)
Any changes to the tax rate and structure that are necessary to implement the shift in legal incidence in a manner that is revenue neutral to the greatest extent possible; and(C)
Any other recommendations to reduce disruption to the state, local governments, and stakeholders during and after the transition;(II)
Require electronic filing of returns for severance taxes;(III)
Require additional electronic data collection necessary to ease the administration and enforcement of the state severance tax on oil and gas, including consideration of opportunities for increased data sharing among state and local government agencies; and(IV)
Make recommendations for the long-term restructuring of the credit allowed in section 39-29-105 (2) including:(A)
Linking the size of the credit in a given tax year to oil and gas taxpayers’ profitability or revenues for that tax year;(B)
Separating the credit for oil production and gas production;(C)
Linking the credit in a given tax year to the relative difference between oil and gas prices for that tax year compared to historic monthly henry hub natural gas spot prices as reported by the United States energy information administration and monthly Cushing, Oklahoma west Texas intermediate spot prices as reported by the United States energy information administration;(D)
Updating the department of revenue’s severance tax form and reprogramming GenTax to make these changes possible; and(E)
Giving consideration to the fact that the current credit size results in the state effectively subsidizing local taxing jurisdictions which was not the original intent of the credit.(b)
The implementation plan required by subsection (7)(a) of this section must include a quantitative fiscal analysis of the changes described in subsections (7)(a)(I) and (7)(a)(IV) of this section and the calculation of the credit allowed in section 39-29-105 (2)(c) and make recommendations as to how they can be implemented while maintaining revenue neutrality.(c)
The persons identified in subsection (7)(a) of this section shall establish a stakeholder group, consisting of affected industries and parties, including local government representatives, to assist in the development of the implementation plan.(d)
The persons identified in subsection (7)(a) of this section shall submit the written implementation plan to the joint budget committee no later than January 15, 2025. Prior to submission of the implementation plan, the stakeholder group shall have an opportunity to review the draft recommendations and individual stakeholders may provide comments in response to the implementation plan to be included with the submission of the implementation plan.(e)
It is the intent of the general assembly that the recommendations within the implementation plan pursuant to subsection (7)(a) of this section be implemented by tax year 2026 with respect to changing the structure of the credit, provided that revenue to the state, as determined by legislative council staff, is neutral with respect to amendments made to 39-29-105 (2)(b) and (2)(c) as amended by House Bill 23-1272. To this end, it is the intent of the general assembly that 39-29-105 (2)(c) be further amended or superseded by the recommendation or recommendations during the 2025 legislative session.(f)
This subsection (7) is repealed, effective July 1, 2025.
Source:
Section 39-29-108 — Allocation of severance tax revenues - definitions - repeal, https://leg.colorado.gov/sites/default/files/images/olls/crs2023-title-39.pdf (accessed Oct. 20, 2023).
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