Government & Politics  August 15, 2008

Battle looms over oil, gas tax credit

Millions of dollars are gushing in from the oil and gas industry in an effort to defeat a proposed ballot initiative that could cost the industry $300 million or more a year.

The measure would end a 30-year property tax credit to the oil and gas industry and direct the majority of that money to college scholarships for low and middle-income families. It would also provide funds for wildlife habitat, clean energy projects and water quality and transportion projects in communities where oil and gas producers operate.

Initiative 113 supporters on Aug. 4 submitted 137,000 voter signatures to the Colorado Secretary of State’s office, almost double the 76,000 valid signatures needed to put the initiative on the Nov. 4 ballot. The Secretary of State has 30 days to verify the signatures.

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The prospect of losing the tax credit has the oil and gas industry heavyweights pulling out their checkbooks and writing million-dollar checks to Coloradans for a Stable Economy. Houston-based ConocoPhillips contributed $1 million on July 29.

“We believe the initiative is poor tax policy,” ConocoPhillips spokesman Bill Tanner said. “We believe that eliminating the tax credit penalizes an industry that’s making significant contributions to the state’s economy and it does little to add additional energy supplies to the marketplace.”

As of Aug. 4 – the latest date for reporting contributions – Coloradans for a Stable Economy had collected $6.6 million in contributions, including $1 million donations each from ConocoPhillips; Houston-based Exxon Mobil Corp.; Chevron Corp., headquartered in Concord, Calif.; San Francisco-based Williams Cos.; and EnCana Oil and Gas of Calgary, Alberta, which was tight-lipped about its contribution.

“I can confirm that we have made a contribution of $1 million but any other inquiries will have to go back to (spokesman) Dan Hopkins and (Coloradans for a Stable Economy),´ said EnCana spokeswoman Carol Howes.

Hopkins acknowledged the group’s financial support is coming from Big Oil. “The funding has clearly come from the industry, but we have support from Club 20 on the Western Slope, Action 22 in southern Colorado and the Denver Metro Club voted to oppose it, and that’s a huge voice of business.”

Club 20 and Action 22 are associations of counties that advocate for their regions and sometimes take positions on statewide issues.

“So the funding is coming from the oil industry but the support is coming from a lot of different groups across the state,” he added.

Some have predicted that opponents of Initiative 113 could spend $15 million to $20 million to defeat the measure, but Hopkins dismisses that estimate.

“There’s no projected total (for spending),” he said. “Those numbers are all speculation.”

David-and-Goliath comparison

On the flip side of the issue is the group promoting Initiative 113, A Smarter Colorado, which as of Aug. 4 had collected a total of nearly $886,000. The biggest contributor to the cause by far has been The Nature Conservancy, based in Arlington, Va., which has made two donations totaling $601,000.

Christine Broda-Bahm, a Nature Conservancy spokeswoman based in Boulder, said the measure is of interest to her group because it would “roughly double the amount of funds available for statewide habitat funding.”

“We think it will generate at least $750 million over the next 30 years,” she said. “The Nature Conservancy is interested because there is a critical need for more funding for lands, water and wildlife and we think A Smarter Colorado is the most important initiative for protecting land, water and wildlife since Great Outdoors Colorado.”

George Merritt, A Smarter Colorado spokesman, said the roughly 7-to-1 contribution ratio so far was expected. “We have said all along that we expect this to be a David-and-Goliath struggle,” he said.

“They (Big Oil) just had the most profitable quarter in the history of the world and we know they can write million-dollar checks. It’s for that reason that Colorado taxpayers don’t need to be subsidizing this industry that made $50 billion in the last three months.”

A Smarter Colorado can also count Gov. Bill Ritter on its side. “The governor is our strongest supporter and has pulled together groups to end the subsidy,” Merritt said. “People have been looking at ending this subsidy for a long time. We’re talking years.”

Progressive 15 – a group representing 15 counties in northeast Colorado including Weld and Larimer – has not taken a formal position on the issue but Cathy Shull, the group’s director, said the group is leaning toward opposing it.

With most of the state’s active oil and gas wells in Weld County, the issue prompted the Weld County commissioners on July 7 to approve a resolution opposing the measure. All five commissioners voted for the resolution, saying they feared it would reduce revenue to the county and potentially result in lost jobs.

Skin in the game

Asked by the Business Report if any of the five commissioners had any financial or professional ties to the oil and gas industry, three – Dave Long, Rob Masden and William Garcia – said they did not, while commissioners Douglas Rademacher and Bill Jerke acknowledged they did receive minor royalties from oil and gas wells on their property.

Jerke, a former Republican state legislator, said he receives royalty payments from “a number of wells” in Weld County and also has “a surface owner’s interest on a number of other wells.” Without disclosing the amount of those royalties, Jerke said, “added together they do contribute to my financial well-being.

“I don’t bring in a million a year on this, believe me,” he said. “It’s pretty small potatoes.”

Jerke said he worked to rein in the oil and gas industry when he served in the Legislature from 1989 to 1996 but feels that it now does “a huge amount of self-policing.”

As a county commissioner, Jerke said he’s concerned that Initiative 113 could hurt the county by potentially reducing the amount of revenue the oil and gas industry provides. He also thinks supporters of the measure – which would direct 60 percent of the money collected to the Colorado Promise scholarship fund for low and middle-income families – are politically pandering.

“It doesn’t provide a dime in new dollars for (higher education) capital construction,” he said. “It’s a displacement of parental tuition dollars, and it really is pandering to parents for votes.”

Millions of dollars are gushing in from the oil and gas industry in an effort to defeat a proposed ballot initiative that could cost the industry $300 million or more a year.

The measure would end a 30-year property tax credit to the oil and gas industry and direct the majority of that money to college scholarships for low and middle-income families. It would also provide funds for wildlife habitat, clean energy projects and water quality and transportion projects in communities where oil and gas producers operate.

Initiative 113 supporters on Aug. 4 submitted 137,000 voter signatures to the Colorado Secretary of…

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