Gov. Bill Ritter and legislative leaders have agreed to create rainy-day funds dedicated to higher education and local communities most affected by oil and gas drilling in Colorado.
Funding will come from bonus payments and royalties the state will receive from the federal government for energy development on federal lands within Colorado, known as Federal Mineral Lease revenues.
“In the past, the distribution of these Federal Mineral Lease payments has been governed by a confusing cascade with off-the-top cuts, overflows, spillovers, more allocations, and more spillovers,” Ritter said at a press conference where he was joined by bill sponsors Sen. Gail Schwartz, D-Snowmass, Sen. Josh Penry, R-Fruita, Rep. Bernie Buescher, D-Grand Junction, and David Balmer, R-Centennial.
With energy extraction booming in Colorado, Federal Mineral Lease revenues are projected to grow substantially over the next 10 years. Forecasts call for the state to receive $2.7 billion from 2008 to 2018.
Under the bill, more than $1 billion will be directed to communities affected by the energy production, with more than $650 million set aside for construction on college campuses around the state.
The bill creates a rainy-day fund by depositing half of any future lease bonus payments into a newly created higher education maintenance and reserve fund. Interest from the fund will pay for campus maintenance projects. In the case of a recession, the fund could be tapped to ensure higher education operating budgets are protected.
The other half of any future bonus payments will go into a local government permanent fund for affected communities. More than $700 million will go toward public education and $150 million will go to the Colorado Water Conservation Board.
“The real legacy of this bipartisan legislation is that when the drilling stops, Colorado will have a substantial permanent fund to take care of the state’s colleges, universities, and impacted communities,” Penry said.