Many opponents of the oil and gas industry seem to forget that Colorado schools receive millions of dollars in funding each year from the Colorado State Land Board — and that revenue comes largely from oil and gas development.
Critical funding for Centennial State schools will be slashed in staggering amounts if Proposition 112 passes at the polls on November 6. The reckless proposition will increase oil and gas development’s 500-foot setback from occupied structures to an excessive 2,500-foot setback distance.
How Public Schools Are Funded in Colorado
The Colorado State Land Board was created in 1876 when President Ulysses S. Grant signed Colorado into statehood. As part of the state constitution, the State Land Board manages a $4.3 billion endowment of assets held in a trust for the benefit of Colorado’s K-12 schoolchildren and public institutions, according to the Colorado Alliance of Mineral and Royalty Owners (CAMRO).
The State Land Board is the second-largest landowner in Colorado, and it generates revenue by leasing 6 million surface and subsurface acres for, among other endeavors, solid minerals extraction, renewable energy, and oil and gas development.
According to CAMRO, Colorado public schools are one of the largest beneficiaries of oil and gas leasing. In the past 10 years, the Colorado State Land Board has provided $1.4 billion to Colorado public schools. The Board distributed half its gross revenue to the Colorado Department of Education’s Building Excellent Schools Today (BEST) program, and the other half to the Public School Permanent Fund, which has awarded $1.7 billion in grants since 2008. The former is a competitive capital construction grant, and the latter is an inviolable $1.05-billion investment endowment for the generation of interest into Colorado’s public school operating budget.
To assess the impact of Proposition 112 on the State Land Board’s school-related funds, CAMRO calculated revenue earnings as if Proposition 112 had been in place over the past three fiscal years (July 1, 2015, through June 30, 2018). With only a 500-foot setback, the State Land Board earned $388.8 million in total operating revenue. If Proposition 112 had been implemented three years ago, “revenue would have been reduced to $158.5 million, a 60% reduction,” the CAMRO report reads.
Since 1980, also per research by CAMRO, the Colorado Land Board has received over $560 million in revenue for its education funding from oil and gas leases in Colorado’s Wattenberg Field alone. These assets generated $166 million in revenue and interest.
Proposition 112 Will Hurt Colorado’s Schools
Should Proposition 112 pass, the State Land Board won’t receive revenue from future innovations in oil and gas production because no new drilling would be permitted. Colorado public schools will likely lose at least $230.3 million in funding in the first three years.
“Colorado already has the strictest regulations on mineral development in the nation,” said Neil Ray, President of CAMRO. “A half-mile setback is not an attempt to regulate the industry. It’s an effective ban on mineral development.”
Ray is right. Under Proposition 112, 85 percent of non-federal land would be eliminated from future oil and gas development, resulting in major job losses and reductions in tax revenue for non-State Land Board lands.
“Through a recent study and CORA request to the State Land Board, we’ve proven that untapped minerals below Colorado’s Wattenberg Field represent nearly $180 billion dollars of working interest cash flow and $26 billion dollars of royalty payments over the life of the field,” Ray said. “This is money that doesn’t just benefit oil and gas companies. It benefits everyday royalty owners, Colorado’s communities and the entire state.”
Like Ray, former Secretary of the Interior Ken Salazar, Colorado Governor John Hickenlooper and U.S. Representative Jared Polis all oppose Proposition 112 – dissent from both sides of the aisle.
All in all, whether it’s from the Colorado State Land Board or privately owned land, the direct loss in state and local tax revenues from new oil and gas activity (including severance taxes, property taxes, income taxes, and sales and use taxes) will grow to between $825 million and $1.1 billion by 2030 and will range from $201 million to $258 million in the first year.