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September 28, 2008 08:30 PM UTC

Amendment 58 - Increase Funding for Higher-Ed

  • 29 Comments
  • by: DavidThi808

This initiative will eliminate a severance tax credit that was granted to the Oil & Gas Industry back when gas prices were very low. The increased revenue will mostly be directed to college scholarships for Colorado residents attending state colleges and universities – as well as the preservation of native wildlife habitat, enhancements in renewable energy and energy efficiency, transportation projects in counties and municipalities impacted by the severance of oil and gas, and community drinking water and wastewater treatment grants.

Further info at Colorado Ballot – The Severance Taxes on the Oil and Natural Gas Industry Initiative.

Arguments For

Amendment 58 eliminates a state tax credit for an industry that is currently experiencing record profits. Better uses exist for state dollars than this credit. Amendment 58 directs the new money to state and community programs that help improve the state’s economy, environment, and infrastructure. These programs are a sound investment in Colorado’s future.

Increasing access to college for middle- and low-income Coloradans is critical to ensuring the state’s long-term economic health. The scholarships funded through this measure offset the high cost of college, making a college education attainable for more residents. As Colorado graduates more state residents, businesses benefit from a larger pool of educated workers that can help grow Colorado’s economy.

Oil and gas production is necessarily limited by the location of reserves. Raising the extraction cost of those resources is not likely to have much of an effect on production in Colorado. Colorado currently has the lowest severance tax rate among large-producing western states. By eliminating the state tax credit and tightening the small-well tax exemption, Amendment 58 increases the compensation that Colorado citizens receive for the extraction of natural resources and brings Colorado’s tax rate more in line with other states.

The money raised by Amendment 58 provides benefits to the state with little or no increase in the cost of energy for Colorado consumers. Oil and gas prices are influenced by numerous factors, and a change in Colorado’s severance tax is not a large enough factor to make a significant difference in Colorado’s prices. Colorado produces less than one-tenth of one percent of the world’s oil. Increasing the state’s severance tax on this level of production is unlikely to affect the market price of gasoline. Likewise, since most of the natural gas produced in Colorado is sold elsewhere, any additional costs are likely to be paid by consumers outside of Colorado.

Arguments Against

There is a list of arguments against this proposal but they are all such utter self-serving B.S. that I will not repeat them here. It’s all FUD (Fear, Uncertainty, & Doubt).

The latest argument against this from the Oil & Gas industry is:

Another campaign official, Rick Reiter, was far harsher, calling the plan a “handout” that would only provide most students with “weekend beer money.”

Vote Yes! Investing in our future Vote Yes

This amendment is where we see if an eminently fair and sensible amendment can be defeated by overwhelming spending by a special interest group trying to continue their free ride.

The severance taxes in Colorado are lower than they are in Wyoming – and Wyoming is not an anti-oil liberal haven. At the same time, oil profits are in the stratosphere and they are drilling with every rig they can find.

We would love it if there was no taxes on the people creating this site. We all would prefer that everyone else is taxed, but we are not – so we get the benefits of government without paying for the costs. The oil companies are no different.

At the same time, a college education is critical for each resident to have a good job and be a strong contributor to our state. Yet Higher-Ed funding is so tight that many students must forgo College because they cannot afford it. This is sentencing them to a life of economic poverty.

Excessive Oil company profits created on the backs of residents forced to live a life of economic poverty is wrong. The oil companies will spend over 10 million to try and continue their free ride. A yes vote will right this wrong.  

My vote an 58

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29 thoughts on “Amendment 58 – Increase Funding for Higher-Ed”

  1. This:

    Arguments Against

    There is a list of arguments against this proposal but they are all such utter self-serving B.S. that I will not repeat them here.

    Is classic, David. I’m being serious – you have made my day with that one.

          1. Raising taxes to support more spending.

            Either raise taxes and put the raise to the general fund, or leave them alone.  

            DO you think the energy companies aren’t just going to raise prices and cut jobs to cover this?

            I’d also prefer that we start graduating some o four high school students rather than funding higher ed.  Just as a matter of pragmatism, but that’s a different issue.

  2. If the issue is excessive profits by O&G, then I favor either an increase in the severance tax that is linked to market price or a windfall tax on the extractors.

    I do not favor either this measure or its evil twin, 52, because I do not want to see any revenue sources that can be applied to water supply development, water quality improvements or water conservation diverted as we go into climate change.

    1. Because if this goes down and in 2 years it’s proposed that it be for water, others will vote it down because they want it for education, or to mitigate the impact in communities where the drilling occurs.

      If you think the O&G companies are under-taxed, vote for this and then work to get funding for water – which will be easier with this additional income to the state.

      1. Correct me if I am wrong, but isn’t the largest recipient of severance tax water projects under the Water Conservation Board?  There are other distributions as well, but it seems that the bulk is dedicated for water.

        Don’t both 52 and 58 redirect money that is currently going for water to other uses?

  3. Even after Amendment 58 passes, Colorado will still have the lowest severance tax rate amongst enery-producing states. This is a reasonable measure, and it’s about time they started paying their fair share for Colorado’s future.  

    1. Stop kidding yourself that they won’t pass this on.

      If you’re suddenly fiscally concerned, go ahead and raise their taxes with no commensurate spending.

      Otherwise, it just looks like you’re squeezing the poor, poor, middle class through their heating bills to pay for your pet project with higher ed.

            1. You said “oil”.

              Well, at first you did.  Then you said both.

              The oil would go out, then (if we don’t keep raising taxes on them) the oil companies would stay here, and taxes would flow into the Colorado treasury like the rivers of chocolate in Iraq did when Saddam was in power.

              Also, it’s be nice to keep the jobs here, but maybe that’s just me.

          2. Prices of natural gas are set on the global and national markets.  $300 million is small potatoes in the big scheme of things and will not affect the price we pay for natural gas.

          3. Prices of natural gas are set on the global and national markets.  $300 million is small potatoes in the big scheme of things and will not affect the price we pay for natural gas.

            1. But the oil and gas companies probably have ledger sheets, right?  They will increase revenue to offset a very significant $30 mil that’s now going to be added on to their cost of doing business in Colorado.

              How do you think they’re going to do that?

              My guess is to cut jobs in Colorado, add surcharges wherever they can that will affect things locally, etc.

              They won’t just eat $300 million.  It’s ludicrous.

      2. The amount of O&G produced here is a drop in the worldwide bucket and the commodity is totally fungible. The tax rate here has no impact on the price we pay. If the trax here is high enough it can affect drilling, but it cannot affect price.

        And with lower taxes than Wyoming (that liberal high-taxing state), there’s no way to claim this is unreasonable.

        1. Something like 35% of the gas produced in Colorado stays in Colorado (if I remember the figure I read recently correctly).  Gas prices apparently fluctuate state-to-state much more than oil prices do.  For example, in June 2008, the “city gate” price of gas (i.e. the price the utility pays to the shipper) in Texas was $12.01/MCF.  In North Carolina, it was $13.73.  In Colorado, it was $9.80, and in Wyoming $9.65. (see http://tonto.eia.doe.gov/dnav/… )

          Even with the new pipelines taking gas from Colorado, we still pay less than other states.  I have no idea how the increase in severance tax might affect this price.  But unlike oil, the market for natural gas is apparently still regional.

  4. Regardless of what you think of the amendment, the title you chose is patently false. Fifty-eight will not put a single cent more into higher education, at least not until the universities respond with double-digit tuition increases.

    There’s a reason that the higher ed community is against this, after all…

  5. The annual after-tax profit for just the top 10 oil and gas funders of the anti-58 campaign totals in the tens of billions of dollars. Adding $321 million a year to their cost of doing business in Colorado represents a fraction of one-tenth of 1 percent of their net income. It’s less than a rounding error on their operating statements. (And that’s just for the top 10; the direct financial impact on the energy industry gets diluted even further when you add all the small operators into the equation.)

    Even if you buy the BS that they’d pass every penny directly to consumers by marking up the retail price of gasoline or natural gas just for consumers in Colorado (which consumes only part of the oil and gas produced here), you’d be talking about a fraction of a penny per gallon of gasoline (whose price is not set in the state, but in regional and global commmodity markets) or unit of natural gas.

    Do the math!

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