Appendix M. Resources for Local Governments to Address Energy and Mineral Impacts

Transcription

1 Resurces fr Lcal Gvernments t Address Energy and Mineral Impacts

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3 RESOURCES FOR LOCAL GOVERNMENTS TO ADDRESS ENERGY AND MINERAL IMPACTS This sectin utlines financial and prgrammatic resurces available t help lcal gvernments address the impacts f energy and mineral extractin industries. Attachments, Other Resurces This sectin includes excerpts frm text fund at web sites listed at the end f this sectin. Several attachments have als been cpied frm dcuments psted at agency web sites, as nted n each image. The graphics in Attachments M-1 and M-2 prvide an verview hw federal and state funds are distributed and used, as defined by statutes. Attachment M-3 is an Excel wrkbk with wrksheets that demnstrate hw state severance tax revenues and federal mineral leasing ryalties are distributed, including funds that are available fr lcal gvernments. Overview There are three primary revenue surces that are directly affected by the activity level f energy and mineral industries perating within Clrad: Lcal Prperty Tax State Severance Tax Federal Mineral Lease Ryalties Severance Tax Credits are als available, allwing crpratins t divert pre-tax dllars int lcal public/private partnerships fr managing future impacts. Lcal prperty tax revenues are administered by lcal gvernments. Clrad state statutes define hw federal mineral lease ryalties and state severance tax revenues are administered thrugh state agencies. Prtins f the funds are distributed t affected lcal gvernments thrugh: Direct distributin Severance Tax Credits Discretinary grants and lans Other prtins f the funds are used by state agencies t supprt prgramming that can benefit lcal gvernments that are directly affected, as well as prgramming that is less specific t affected cmmunities, including: Technical assistance t affected lcal gvernments Prgramming in areas with affected lcal gvernments Educatin prgramming thrughut the state. Funding fr lcal gvernments is administered thrugh the Department f Lcal Affairs (DOLA). DOLA is charged t integrate tax peratins with lcal gvernment impact assistance prgrams thrugh the Energy and Mineral Impact Assistance prgram. The prgram distributes related funds t lcal gvernments as direct allcatins, grants and lans. The largest prtin f the prgram funds are distributed thrugh grants and lans. Prpsed Plan/Final EIS August 2006 M-1

4 Clrad agencies that receive a prtin f the funds t prvide technical assistance and supprt ther prgramming include: Department f Lcal Affairs (DOLA) Department f Natural Resurces (DNR) Clrad Water Cnservatin Bard Department f Educatin (CDE) Mre than half f all revenues are distributed t Clrad Department f Educatin Fllwing is a summary f hw funding surces are distributed and hw they can be accessed by lcal gvernments. The graphics in attachments M-1 and M-2 prvide additinal detail. REVENUE Federal Mineral Leasing Lcal Gvernment COUNTIES X Statute Stipulated Distributin Pints Twns; Schl Dist s State Agencies Dept f Educ. DOLA DNR State Schl Impact Assistance Fund DNR Trust Fund Fund CWCB Ops Acct [as available in 2 nd cut ] X X X State Severance Tax X X X X X REVENUE Federal Mineral Leasing State Severance Tax State Severance Tax Credit Ptential Surces f Funding fr Lcal Gvernment Lcal Gvernment State Agencies Twns; CDE DOLA DNR COUNTIES Schl Dist s State Fund Energy Mineral Impact Fund CWCB Ops Acct Direct distributin [direct distrib. as available in 2 nd cut ] Direct distributin Any lcal jurisdictin is eligible t partner with cmpanies n tax credit prject. General DOE grants Grants and Lans Grants and Lans Grants State Severance Tax Revenues 1977 the General Assembly fund that when nnrenewable natural resurces are remved frm the earth, the value f such resurces t the state f Clrad is irretrievably lst. The Legislature established a severance tax n develpment, prcessing, r energy cnservatin f certain minerals and mineral fuels, declaring the tax t be means fr the state t recapture a prtin f the lst wealth. The legislature als expressed its intent that a prtin be made available t lcal gvernments t ffset the impact created by nnrenewable resurce develpment. Federal Mineral Lease Ryalties Since the 1920's: Federal gvernment has charged ryalties n mineral prductin frm federal lands and returned a prtin f the revenues t the states, cunties and schl districts frm which the minerals were withdrawn. In 1977 and 1982, the Clrad General Assembly passed legislatin with a prvisin designating a prtin f these federal funds t be depsited in a Lcal Gvernment Mineral Impact Fund. M-2 Prpsed Plan/Final EIS August 2006

5 DOLA manages this fund thrugh the Energy and Mineral Impact Assistance Prgram, including direct distributins and grants and lans fr lcal gvernments. Energy and Mineral Impact Assistance Prgram The Energy and Mineral Impact Assistance prgram was created in 1977 by the General Assembly t prvide funds and technical assistance t lcal gvernments t ffset the impact created by nnrenewable resurce develpment. Designated Agency: The Department f Lcal Affairs (DOLA) is designated as the agency respnsible t integrate tax peratins with lcal gvernment impact assistance prgrams thrugh the Energy and Mineral Impact Assistance prgram. Funding: Funding fr the prgram is drawn frm state severance tax revenues and federal mineral lease ryalties. Being a federal ryalty payment, many lcal gvernments have determined that federal mineral lease funds are exempt frm TABOR limitatins. Administratin: Related funds are depsited int separate management funds: Lcal Gvernment Severance Tax Fund, fr state severance taxes [C.R.S thrugh ] Lcal Gvernment Mineral Impact Fund, fr federal mineral lease ryalties [C.R.S thrugh ] Statutes gverning the Energy and Mineral Impact Assistance prgram are bradly cnstructed t: Priritize funding fr public schls and plitical subdivisins scially r ecnmically impacted by develpment, prcessing r energy cnversin f fuels and minerals leased under said Federal Mineral Lands Leasing Act Use funds fr planning, cnstructin and maintenance f public facilities and fr public services. As prescribed by state statutes, DOLA ensures that prtins f these tw funds are distributed t lcal gvernments thrugh: direct distributins, severance tax credits and grants and lans. Direct Distributin t Lcal Gvernments Clrad s Energy and Mineral Impact Assistance prgram distributes a prtin f the federal mining lease ryalties and state severance tax revenues directly t lcal gvernments, using frmulas defined by related statutes and regulatins. Emplyee Residence Reprts Based n state statute C.R.S severance tax payers submit reprts detailing the area f residence fr their emplyees that qualify as resident prductin emplyees. This des nt include all persns emplyed by a cmpany r by auxiliary service businesses. The cunt als des nt include emplyees wrking n stripper wells. Prpsed Plan/Final EIS August 2006 M-3

6 State Severance Tax Revenues N applicatin is required fr direct distributins. DOLA makes this distributin in August f each year. Attachments M-1 and M-2, illustrate the frmulas stipulated by state statute C.R.S and used distribute funds t lcal gvernments and state prgrams. Initially, 50% is distributed t DOLA s Lcal Gvernment Severance Tax Fund and 50% t Department f Natural Resurce s Trust Fund, 15% f the DOLA s Lcal Gvernment Severance Tax Fund is then distributed directly t lcal gvernments, DOLA calculates, by mineral type (Cal, Metals, Oil and Gas),: - the 15% severance tax pt that will be distributed t lcal gvernments, based n the number f resident prductin emplyees that were reprted t Department f Revenue by severance tax payers thrugh Emplyee Residence Reprts, - adds the prrated share f interest earnings that these funds have earned in the fiscal year, - adds any penalty cllectins, - calculates the specific payments t twns and cunties. At the cnclusin f the exercise, the Department f Revenue sends the peratr name and address list back t the COGCC with suggested updates fr the next cycle in January. Federal Mineral Leasing Ryalties Mineral Lease Payments frm the State Treasurer (CRS ) N applicatin is required. Depending n when infrmatin is received frm the federal gvernment, the State Treasurer makes quarterly payments t lcal gvernments. Attachments M-1 and M-2 illustrate the frmulas stipulated by state statute [C.R.S.34-63] and used distribute funds t cunties, twns, schl districts and state prgrams. The distributin frmula is set up in a cascade frmat, which prvides a first cut share t the parties and then allcates residuals in a secnd and third cut. The largest share f the funds ges t the State Schl Fund fr distributin t schl districts thrughut the state under the Schl Finance Act, 10% f the ttal ges t the Clrad Water Cnservatin Bard fr funding f lcal water supply develpment, Lcal Gvernment Distributins, At each pint in the frmulas, distributins t cunties are calculated based n the number f resident prductin emplyees reprted t the Department f Revenue thrugh annual Emplyee Residence Reprts, Cunties, cities and schl districts in cunties with federal mineral leases receive direct payments n a quarterly basis, up t 1.2 M, Anther prtin is distributed t lcal gvernments thrugh the DOLA s Energy and Mineral Impact Fund which has tw distributin shares within the cascade frmula, The statute requires Cunties t share their ttal distributin with schls and twns, based n a set frmula. This minimum required split can be increased by the cunty cmmissiners and therefre varies frm cunty-t-cunty and year-t-year. - Distributins t schl districts are based n reprted enrllment. - Distributins t twns are distributed prprtinal t ppulatin M-4 Prpsed Plan/Final EIS August 2006

7 Energy Mineral Impact Assistance Fund Distributins N applicatin is required fr direct distributins. DOLA makes this distributin in January f each year Based n C.R.S (3), a prtin f the federal mineral leasing funds depsited in the Lcal Gvernment Mineral Impact Fund are distributed directly t municipalities and cunties. The calculatins is based n: A lcal gvernment s share f the final residual verflw in the cascading frmula. The cunt fr resident prductin emplyees (as reprted in Emplyee Residence Reprts t the Department f Revenue. Diverting Pre-Tax Funds t Lcal Gvernments Severance Tax Credits Based n C.R.S , the State allws severance taxpaying crpratins t make cntributins fr lcal public facility and service prjects and t cnvert a cntributin int a severance tax credit if: The credit is taken n taxes fr new r increased energy/mineral prductin, and The cntributin is intended fr use in addressing frnt-end impacts that will be assciated with the new r expanding prductin. Cntributin Agreement The severance taxpayer can create this kind f severance credit by frming an agreement with a lcal gvernment fr the cntributin and submitting the agreement t DOLA fr review and ensuring that the agreement specifies the fllwing six items: 1. The taxpayer frm which the cntributin is being made and credit claimed. 2. The lcal jurisdictin t which the cntributin is being made. 3. The need fr such cntributin relative t impacts frm a new r expanding mineral peratin. 4. The nature f the cntributin in the frm f a specific descriptin f the quantities, term, and cnditins which make up the cntributin and prcedures fr cnveyance. This may include cash transfers, prperly valued materials and services, and lsses frm the purchase f public bnds issued by the jurisdictins. 5. The purpse f the cntributin in the frm f a descriptin f the relatinship f the cntributin t need and its rle in lcal gvernment planning and mitigatin prgrams. 6. The amunt f the cntributin as determined by fair market value f the cntributed prperty and/r services at the time f the executin f the agreement. Cntributin Agreement Review and Tax Credit Decisin The submitted agreement will be reviewed by the state Energy and Mineral Impact advisry cmmittee. The DOLA Executive Directr will make the final decisin. The criteria fr review f agreements by the state advisry cmmittee and executive directr are similar t the funding guidelines used fr the grant and lan prgram except fr a greater emphasis n the need fr frnt end financing befre the new/expanded ad valrem tax base is established. Prpsed Plan/Final EIS August 2006 M-5

8 Credit agreements must be reviewed and priritized lcally with ther credit agreements and grant/lan requests submitted during a grant review cycle. Apprved Cntributin Agreements If apprved, the cntributin agreement is sent t the State Department f Revenue as dcumentatin fr future credit claims by the crpratin. Municipalities, cunties, schl districts and ther special districts may use such a credit agreement t btain industry cntributins. Befre Yu Apply Mre cmplete written infrmatin n the severance tax credit is available upn request frm DOLA. Lcal units f gvernment cnsidering this mechanism are encuraged t their Department f Lcal Affairs reginal manager t discuss prcedure and technical requirements. Grants and Lans The largest distributin f funds frm the Energy and Mineral Impact Assistance prgram ccurs in the frm f discretinary grants and lans. Technical Assistance fr Prspective Applicants Applicatin frms, prgram guidelines and technical assistance are available frm department reginal managers. The applicatin frm and prgram guidelines are als available DOLA hme page, Applicatin Deadlines Three Funding Cycles Applicatins are accepted cntinuusly and cnsidered in the curse f three regular funding cycles each year. Deadlines Psted and Annunced The applicatin deadline fr each f the funding cycles is psted n the Department f Lcal Affairs hme page ( and annunced thrugh the Clrad Municipal League, Clrad Cunties, Inc., and the Special District Assciatin. Types f Financial Assistance Available Grants fr the: planning, cnstructin and maintenance f public facilities and prvisin f public services. Lans In 1985, the Energy Mineral Impact Assistance prgram was expanded [C.R.S ] t include lans r cmbinatins f grant and lan funding fr the planning, design, cnstructin, erectin, building, acquisitin, alteratin, mdernizatin, recnstructin, imprvement, r expansin f: dmestic wastewater treatment wrks, and ptable water treatment facilities. M-6 Prpsed Plan/Final EIS August 2006

9 Eligible Activities Examples f public facilities: water and sewer infrastructure, twn/city halls, cunty curthuses, cmmunity centers, public rads and streets, emergency medical and fire prtectin facilities and equipment. Examples f public services: cmmunity develpment assistance t lcal gvernments, internship prgrams and cmmunity revitalizatin assistance. Guideline fr Maximum Grant r Lan Amunts Maximum grant request: 500,000 While there is n abslute limit t the amunt f funding an applicant may request, 500,000 is the suggested guideline. NOTE: It is recgnized that areas with the heaviest prductin incur unique impacts. DOLA may cnsider increasing the grant guideline when a prject presents a cmpelling need, is critical t addressing significant impacts, represents a unique pprtunity fr enhanced quality f life, r is f mnumental significance in strengthening a cmmunity fr the future. Maximum water and sewer lan request: 1,000,000 Eligible Recipients By statute, eligible recipients are: Municipalities, cunties, schl districts and mst special districts, as plitical subdivisins that are scially r ecnmically impacted by the develpment, prcessing r energy cnversin f fuels and minerals. Nn-prfit crpratins that are being used by lcal gvernment recipients t prvide a public service, but the lcal gvernment must assume respnsibility administering funds that may be awarded and wnership fr any real and/r tangible assets acquired with the funds awarded. State agencies are eligible recipients (f federal mineral lease funds), if they: have specific spending authrity frm the General Assembly, have the supprt f benefiting lcal gvernments, and wrk n prjects that addresses adverse impacts frm energy and mineral develpment at lcal, reginal r statewide level. Grant Prject Selectin Criteria Fllwing is an abridged versin f the criteria r guidelines that DOLA staff and the state advisry cmmittee use t review applicatins and making funding decisins. A full set f current guidelines is available at the DOLA hme page [ a. The range and extent f impacts assciated with energy and mineral develpment, prcessing r energy cnversin affecting the applicant s jurisdictin, including areas indirectly affected. [The prgram maintains flexibility t respnd t areas thrughut the state with lesser impacts.] b. Extent t which prject addresses existing/prjected cmmunity impacts. c. Availability f alternative funding. Pririty r level f funding may be adjusted, based n degree prject relates t energy/mineral impacts. Prpsed Plan/Final EIS August 2006 M-7

10 d. Amunt f lcal cash and ther funds relative t the grant request amunt. Larger matching amunts are generally mre cmpetitive. e. The level f in-kind cntributins cmmitted t the prject. f. Lcal pririty as designated by jurisdictin r by a cuntywide impact team. g. Relatinship f prject t identified cmmunity gals and/r dcumented public health and safety issues. h. The applicant's fiscal capacity and ability t pay, reviewing the extent f lcal tax resurces lcal tax effrt in slving energy impacts. i. Cnsistency with lcal/reginal plans. Department staff will wrk with apprpriate parties t reslve any cnflicts befre a decisin. j. Likelihd and urgency f timely implementatin f the prpsed prject. k. The verall feasibility f the prpsed prject. l. The extent t which the prpsed prject may duplicate ther effrts r is nt crdinated with ther related effrts. m. Likelihd the prject can be cmpleted within the prpsed budget. n. The management capability f the applicant/implementers.. The cnsequences f nt prviding funding. Lan Prject Selectin Criteria Fllwing is an abridged versin f the criteria r guidelines that DOLA staff and the state advisry cmmittee use t review applicatins and making funding decisins. A full set f current guidelines is available at the DOLA hme page [ a. By statute, the minimum interest rate is 5 percent. The lan term will generally nt exceed 20 years. Payments are scheduled n an annual basis, with a principal and interest payment due September 1. b. Lans will be authrized fr nly thse parts f a dmestic water r sewer system specified in C.R.S (1)(b)(II). Raw water strage r transmissin t a treatment facility cannt be cnsidered fr lans. c. Lans generally will be the first ptin lked at fr deferred maintenance and grwth-related sewer and water prjects. d. The staff will identify fr the state advisry cmmittee thse prjects which appear t warrant a lan as a reasnable alternative t full grant funding. e. Lan participatin may be used as a means t increase lcal match fr a prject when lcal cash n hand is minimal. f. Debt refinancing is generally nt eligible. g. Lan authrity is nt intended t deter cmmunities frm using traditinal funding surces fr prjects. h. The department will perfrm a cmmunity fiscal analysis t determine lan feasibility. The analysis will include a review f user rates, tap fees, verall cmmunity tax burden and fee structures, ppulatin statistics, existing debt service, financial statements, fund balances and anticipated capital imprvements. M-8 Prpsed Plan/Final EIS August 2006

11 Attachment M-1 State Severance Tax Revenue Flw Chart Frm: Clrad Department f Lcal Affairs Prpsed Plan/Final EIS August 2006 M-9

12 Attachment M-2 Federal Severance Tax Revenue Flw Chart Frm: Clrad Department f Lcal Affairs M-10 Prpsed Plan/Final EIS August 2006

13 Attachment M-3 Energy and Mining Impact Mitigatin Funding Surces Wrkbk Estimate fr Lcal Gvernments SUMMARY: Mining Impact-Related Revenues and Funding Surces Cunty Garfield Tax Year 2003 General Fund Capital Budget LOCAL TAX REVENUES Prperty Tax n Oil and Gas ** 3,400,000 at Cunty's discretin REVENUES DISTRIBUTED TO LOCAL GOVT State Severance Tax Revenue 1,128,000 at Cunty's discretin Federal Mineral Leasing Revenue 1,200,000 66, % f funds must g t Capital Budget BLM - Payment in Lieu f Taxes 1,200,000 TOTAL 6,928,000 66,000 GRANTS and LOANS Revenues administered by state agencies as part f cmpetitive grant and lan prgrams*** Department f Lcal Affairs (DOLA) Energy + Mineral Impact Fund 45,712,500 at Cunty's discretin Department f Natural Resurces (DNR) Department f Educatin DNR Operatins Accunt 8,000,000 at Cunty's discretin Clrad Water Cnservatin at Cunty's discretin Bard 14,300,000 State Schl Fund [gverned by Schl Finance Act] 39,400,000 TOTAL 68,012,500 Prpsed Plan/Final EIS August 2006 M-11

14 State Severance Tax Rate Appendix M State Severance Tax Revenue Distributin ** Required Fields [Surce: DOLA ] TAX YEAR 2003 TAX RATE 2.2% (NOTE: rate varies annually, based n value f prductin) State Severance Tax Revenues (surce: DOLA 2004) Net Clrad Severance Tax 32,000,000 Emplyee Residence Reprts** Number f Emplyees Residing within the Cunty As Reprted t the State Dept f Revenue by Cmpanies Paying Severance Taxes (Surce: DOLA, Garfield Cunty) Resident Prductin Emplyees Reprted TAX YEAR Ttal Prductin Emplyees in Clrad 1000 ** NOTE: DOLA calculates the Cunty's share, based n Emplyee Residence Reprts and a set f ther variables (like tax penalties paid by cmpanies, etc.) that cannt be meaningfully prjected. M-12 Prpsed Plan/Final EIS August 2006

15 Distributin f Federal Mineral Leasing Funds ** Required Fields Assessed Valuatin fr Oil and Gas (Surce: DOLA Annual Reprt, 200 ) Assessed fr Fed. Tax 130,000,000 Exempted (4,000,000) TOTAL Assessed 126,000,000 Calculatin f Federal Mineral Leasing Funds [Surce: DOLA Annual Reprt, 200 ] Based n the Federal Mineral Leasing Act, rental fees and ryalties are cllected based n the assessed valuatin f a prtin f the energy and minerals that are extracted frm federal lands. Based n Leasing Act regulatins, a substantial percentage f the il and gas that is extracted is exempted frm this assessment (see abve). Quarterly a net return fr cllected funds is calculated and 50% f the net is distributed t the state. Net return is calculated with deductins fr administrative verhead and related claims frm agencies like the departments that are managing areas f the Ran Plateau as part f the Naval Oil Shale Reserve. Return f Federal Mineral Leasing Funds t the Clrad Mineral Leasing Fund [Surce: Department f Revenue] Net Funds frm CO Clrad Mineral Leasing Fund US Treasury 126,000,000 50% f Net 50% f Net 63,000,000 63,000,000 Emplyee Residence Reprts Number f Emplyees Residing within the Cunty [Resident Prductin Emplyees] As Reprted t the State Dept f Revenue by Cmpanies Paying Severance Taxes [Surce: Department f Revenue] Year Cunty Resident Prductin Emplyees State Ttal Resident Prd. Emplyees ,000 Cunty's Estimated "Share" f Federal Mineral Leasing Funds** Figure Estimated by DOLA, using Department f Revenue Reprts (Surce: Department f Revenue) Prpsed Plan/Final EIS August 2006 M-13

16 Cunty's Estimated "Share" 48% NOTE: A lcal gvernment's share f distributed funds is calculated at several pints in this cascading frmula based n the number f "resident prductin wrkers" that are reprted t the Clrad Dept f Revenue by severance tax payers using Emplyee Residence Reprts (see abve). Distributin f Federal Mineral Leasing Funds thrugh the Clrad State Treasurer and Dept f Lcal Affairs Clrad Cunty's Mineral Leasing Fund Estimated "Share" 63,000,000 48% FIRST 'CUT' 63,000,000 Cunty f Origin 50% f Cunty's Estim 'Share', up t 200K 0 DOLA's Impact Assistance Fund 15% f ttal 9,450,000 CWCB Cnstructin Fund 10% f ttal 6,300,000 State Schl Fund 25% f ttal 15,750,000 SPILLOVER 37,800, % up t 10.7M n/a n/a n/a 10,700,000 SECOND 'CUT' 27,100,000 Remaining bal f the 50%, up t 1.2M 1,200,000 n/a n/a TOTAL Distributin t COUNTY 1,200,000 SCHOOLS' Dist fr Cunty 1,200,000 Min 25% f Cunty's Ttal Distrib 300,000 TOWNS' Distrib fr Cunty (IF Cunty's Ttal >250K) 950,000 Min 37.5% f Cunty's Ttal Distrib > 250K 356,250 COUNTY's Balance 543,750 Residual f Ttal Distrib t Cunty 543,750 M-14 Prpsed Plan/Final EIS August 2006

17 OVERFLOW 25,900,000 n/a 50% f verflw [fr lcal gvt grants] 12,950,000 n/a 50% f verflw 12,950,000 DISTRIBUTION thru DOLA 12,950,000 25% f DOLA funds frm Final 'Cut' NO 75% DOLA Final 'Cut' (Residue t cunties that have 'share' in Overflw) 9,712,500 BALANCE PLUS Distrib thru DOLA 543,750 NO 32,112,500 6,300,000 39,400,000 Prpsed Plan/Final EIS August 2006 M-15

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20 DES04-04 U.S. Department f the Interir Bureau f Land Managment Clrad State Office