DENVER – State lawmakers have temporarily solved a budget crisis following a
The House on Wednesday gave final approval to a bill that would pull from reserve funds to cover initial payments in the upcoming fiscal year.
Current estimates place refunds at around $115 million, though it is unclear how many companies are owed money.
The Supreme Court on April 25 determined that the state incorrectly disallowed a deduction related to transportation, manufacturing and processing costs. At issue was the cost of capital.
BP America argued that because it built facilities and transported gas, it was allowed to claim deductions on the cost of capital associated with transportation and processing. The Supreme Court agreed.
The case stemmed from technology BP created in the 1980s in Southwest Colorado to produce natural gas from coal seams.
The House passed the bill 36-29, sending the legislation to the governor, who is expected to sign the measure.
Separate legislation that would have prohibited companies from claiming the deduction in the future died in the waning days of the session, which ended Wednesday.
Moving forward, it’s unclear just how much of a fiscal impact the ruling will have on the state and local governments.
One estimate from legislative staff says severance taxes will decrease by about 13 percent annually given the ruling. The tax is used to assist local governments with mitigating impacts from the oil and gas industry.
It’s likely that lawmakers will come back next year to establish a more permanent solution.
pmarcus@durangoherald.com
