Oil and gas developments in several Front Range municipalities could mean up to $1.85 billion in new property tax revenue over the next decade, according to a study released this week.
The study by the free enterprise think tank Common Sense Policy Roundtable (CSPR) says five Front Range local governments – Aurora, Broomfield, Commerce City, Erie, and Johnstown – could generate $1.39 billion to $1.85 billion in revenue over the next decade from property taxes paid through oil and gas development.
That revenue would mostly benefit public schools in those municipalities, which could receive from $822 million to $1.1 billion in revenue, the study says.
“Under state law, the property tax assessment rate for oil and natural gas production is 12 times higher than residential property and three times higher than commercial property,” said Simon Lomax, an energy fellow for the policy group. “That higher tax rate is a major factor behind these revenue estimates.”
The study used local property tax formulas, existing oil and gas development proposals, oil and gas development production estimates, and forecasts for commodity prices.
Developments in Aurora would generate the highest amount in property tax revenue at an estimated $709 million to $944 million. Broomfield could see from $186 million to $248 million; Commerce City from $300 million to $400 million, Erie from $152 million to $202 million; and Johnstown from $39.3 million to $52.3 million.
“This is not an exhaustive list of municipalities where future energy development may take place, and these revenue estimates are not intended predict future tax revenues down to the very last dollar and cent,” said Chris Brown, the group’s policy and research director. “Instead, we chose these communities to give policymakers and the public a better sense of how oil and gas development can grow a local government’s property tax base once energy production begins.”
Colorado’s Democratic-led legislature passed Senate Bill 181 last session, which overhauled how the state’s regulatory body for the industry, the Colorado Oil and Gas Conservation Commission (COGCC), will regulate oil and gas development. The legislation requires the commission to prioritize health, safety and the environment over industry development and gives local governments more leeway for regulation.
The commission is in the process of new rule-making, but some have cited “regulatory uncertainty” for problems in the industry.