A letter to state Sen. Marc Catlin and state Rep. Elizabeth Velasco has been prepared by the city staff of Rifle regarding the diversion of Local Government Severance Tax Funds to address budget shortfalls at the state government level. 

The Local Government Severance Tax Fund was originally created to help support communities  impacted by resource extraction activities, like oil and gas, which sometimes leads to a “boom and bust” economy of those communities. The “bust” of that equation was to be offset by the Local Government Severance Tax Fund. 

The city of Rifle relies on the Energy Impact Assistance Fund (EIAF) from the Department of Local Affairs (DOLA) for their projects. Some of these funds include $1 million for the Railroad Avenue from Fifth Street to Ninth Street project and $2 million for the water plant construction. 

“They (the state of Colorado) are looking at taking money, a significant chunk away from the Energy Impact Assistance Fund and using it to fund general fund operations at the state level,” said city manager Patrick Waller. “They already do interest sweeps, where they’ll sweep any interest that comes out of this money and use it to support the general fund.”

Waller said that if the state takes a large chunk out of the EIAF, then it will make getting that funding for capital projects much harder. 

“It’s an important funding source for the city and the money was originally dedicated to municipalities, so the letter in front of you is merely reminding our representatives of that,” Waller said. “The state has done this time and time again, where they take this money.”

City attorney Jim Neu said the money comes from severance tax payments and that was why the money was dedicated to helping municipalities impacted by natural resource extraction and that there is a statute on this issue. 

“This has happened many times in my career,” Neu said. “They shouldn’t do it.”

Councilor Karen Roberts clarified that the letter is reminding the state the city knows where the money comes from and Neu agreed. 

“The money’s coming from our communities that are impacted,” he said. Roberts said that it should come back to the community and Neu agreed again. 

Roberts asked, jokingly, if they could do it in red ink and Waller suggested all capital letters. 

“It’s especially important, I think, for these folks to understand the impact that this money has on Rifle, which is within their district (Catlin and Velasco),” Waller said. 

Neu said that the energy extraction impact doesn’t have to be today, but that Rifle is affected energy extraction. 

“They have a lot of making up to do,” Neu said. “This is the way it’s supposed to work and the statute’s so clear on it, but the legislature looks at this as free money, instead of dealing with their general fund problems, finding other revenue sources, because this is going in places that shouldn’t have it.”

Councilor Michael Clancy said he hopes that the representatives Catlin and Velasco will be willing to stand up for the city of Rifle and the impact they face from the energy extraction work over the years.