In addition to the direct assistance to local governments that the American Rescue Plan Act will deliver, the state of Colorado also will be the recipient of roughly $4 billion. While there are no doubt significant needs the aid will address, the windfall also can salve a wound that was opened during the Great Recession and has never been healed.
From 2008-2013, the state of Colorado was able to soften the cuts to state programs and departments by backfilling the state General Fund with severance tax and federal mineral lease (FML) revenue meant to assist local governments with infrastructure impacts caused by extractive industries — and it wasn’t chump change. In total, nearly $400 million dollars was diverted from a grant fund housed in the Department of Local Affairs (DOLA) and not one nickel has ever been paid back. If not swept to lessen painful decisions the legislature and governor would have otherwise had to make within the state budget, those dollars would have been matched approximately 3:1, spent on infrastructure mostly in rural Colorado, and created a roughly $1 billion economic impact at a time when jobs and projects were needed the most.
More salt was poured in the wound in 2015 when additional severance tax revenue backfilled the state’s General Fund so that the legislature didn’t have to look elsewhere to supply revenue for that year’s TABOR refund. The state kept its programs, while rural municipalities and counties were left without funds the 1978 statute creating the severance tax says belongs to them “to offset the impact created by nonrenewable resource development.”
Energy impact grant funds are used predominantly for infrastructure, and local governments have pressed for years for the state to put money back into the impact assistance grant program. Before 2008, there was a balance large enough to ensure funds were available in down years. A competitive grant process and requirements for a local match ensure local “skin in the game,” allowing local governments to fund infrastructure such as roads, bridges, water, wastewater, broadband, and public safety buildings and equipment.
With declines in severance tax revenue beginning in 2018, the funds that otherwise would have been available to bridge the gaps in the normal ebb and flow of severance tax and FML revenue are long gone. The ability to invest in infrastructure at a time with Colorado needs it the most has been hamstrung by politically expedient decisions starting over a decade ago. Gov. Polis and this General Assembly can fix it in 2021 in one fell swoop.
The Colorado Municipal League urges the governor and the legislature to put back funds that helped the state when it needed it for the benefit of local governments that continue to need it — and to do so without additional strings attached. Putting one-time money back into the fund would be highly stimulative and would correct the damage done by using the fund as a piggy bank to minimize difficult decisions on the state’s budget.
Putting $400 million of the state’s Rescue Plan Act funds back into the program would heal that old wound, and there would be many projects and new, well-paying jobs created to show for it.
Kevin Bommer is the executive director of the Colorado Municipal League, the state association of 270 Colorado municipalities. He has been with CML since 1999 and was a lobbyist for CML in the statehouse from 2001-2019 before becoming executive director two years ago.