The state Senate Monday issued its first votes on the 2015-16 state budget. The Senate Appropriations Committee voted to pass the budget bill, Senate Bill 15-234; and a package of related budget bills.

The biggest budget fight may come from one of those related bills. SB 255 takes $20 million from the state’s severance tax fund and transfers it to the general fund. The bill passed on a 4-3 vote with bi-partisan opposition.

Severance taxes are levied by the state for “severing” a mineral from the earth. Half of the severance taxes received by the state go back to local communities impacted by mineral extraction. The Department of Local Affairs distributes those funds through its Local Government Severance Tax Fund. The other half goes to water projects, regulation of oil and gas and mineral industries, low income energy assistance and wildlife conservation. The Department of Natural Resources (DNR) distributes the funds through its Severance Tax Trust Fund. Water projects, under the Colorado Water Conservation Board, get the lion’s share of the severance tax money that goes to DNR.

SB 255 would take the first $20 million received in severance taxes, before those tax revenues are distributed to either fund, and put it into the general fund to help balance the 2015-16 budget. It’s the only bill in the budget package not sponsored by the entire JBC. Rep. Bob Rankin, R-Carbondale, voted against it in committee.

He’s not alone in his opposition. Monday’s “no” votes in Senate Appropriations came from Sens. Jerry Sonnenberg, R-Sterling; Laura Woods, R-Arvada and Mary Hodge, D-Brighton.

Since the appropriations committee was the committee of reference, witness testimony was allowed, and the hearing did not lack for opposition.

Diane Orf, representing the Colorado Water Congress and the Associated Governments of Northwest Colorado, pointed out the tax revenue helps local communities in down times. Next year may be one of those, when severance taxes are expected to reflect the decline in oil and natural gas prices. “Those projections are not comforting,” Orf told the committee. “It’s hard for local communities to sit back and let [the tax] go,” since it’s intended to be squirreled away for the bad years.

Orf also pointed out that the severance tax dollars that pay for water projects may be needed to pay for projects recommended in the state water plan. Those recommendations are expected in June.

JBC Chair Sen. Kent Lambert, R-Colorado Springs, told the committee that he reluctantly carried the bill. He pointed out the governor’s budget proposal requested $47 million from severance taxes, and that was not acceptable to the JBC. “We’ve tried to keep this down to a maximum” of $20 million, he said.

Fellow JBC member Sen. Pat Steadman, D-Denver, had a different take. He told those who opposed the bill that the more severance tax money that comes in, the more “it pushes general funds out the door” for refunds under the Taxpayers’ Bill of Rights (TABOR). It would be nice if the severance taxes could be saved for a rainy day, but TABOR doesn’t allow it. Steadman also said that since severance taxes contributed to the state exceeding its TABOR revenue limit and resulting refunds, “you’re going to help us pay for it.”

Rankin told The Statesman that it’s possible that the severance tax issue may become a referred measure to the voters. Lambert said Monday that Rankin had not discussed that in committee.

The severance tax decision was a compromise reached with the governor’s office, Lambert told The Statesman Monday. “We do have to compromise a little bit; we do have a split legislature, and there were other balancing priorities we had to consider.”

The JBC made several last-minute decisions to balance the budget. That included reducing the K-12 appropriation by $50 million, which would have helped reduce the negative factor. There is still $25 million in the 2015-16 budget for the negative factor, Lambert said.

The negative factor is a budget stabilization tool devised by lawmakers in 2009. It allows the Legislature to subtract dollars from K-12 funding based on how much is available for school finance. About a billion dollars was subtracted from K-12 funding during the recession. Last year’s budget put $110 million toward reducing the negative factor.

The $20 million also will help pay for bills that haven’t yet been passed, Lambert said. Senate President Bill Cadman, R-Colorado Springs, pointed out last week that $8 million had been set aside to fund the workforce development package. Another $5 million each has been set aside to fund bills coming out of the House and Senate Appropriations committees.

Lambert pointed out that local communities have other tax revenues available, such as a sales tax assessed on real or personal property. Lambert said severance taxes brought in a windfall in 2014-15, estimated at $369 million.

The JBC’s compromise also included what to pay for in capital construction. The 2014-15 budget put $279.1 million into 22 capital construction projects. Some projects require multi-year funding, and the 2015-16 budget bill pays for those continued costs. The budget bill also pays for other capital-related responsibilities and a new project, a “Campus Commons” building at the University of Northern Colorado that requires $23 million in state funding.

The Senate divided into its caucuses on Tuesday to discuss the budget bill and amendments. The budget package will go to the Senate floor for second reading on Wednesday and final vote on Thursday.

Marianne@coloradostatesman.com