Counties drop plans to pursue severance tax

VERNAL — After working since early this year to shape a coalition of supporters and draft legislation that would bring millions of dollars in severance taxes back to the Uintah Basin, leaders from Duchesne and Uintah counties are dropping the plan.

"The counties will not be vigorously looking to the state to share its wealth at this point in time," said Duchesne County Commissioner Larry Ross, speaking at a meeting of oil and gas industry representatives last week in Vernal.

It's estimated that the state will take in about $100 million in severance taxes this year thanks to the boom in oil and gas drilling and production in Utah. The money goes directly into the state's general fund.

About 77 percent of the oil and gas activity in Utah is occurring in Uintah County, and about 13 percent is taking place in Duchesne County, said Uintah County Commission Chairman Mike McKee. Both counties now face rapidly deteriorating roads and other demands suddenly placed on their infrastructure.

It costs Uintah County about $750,000 to upgrade one mile of B road in the oil patch, said McKee.

Elected officials saw the severance-tax legislation as the perfect answer to their economic woes. "We believe the state is collecting adequate money from industry, enough to satisfy everyone. But the governor's office is not willing to share," Ross said.

Last March, McKee and Ross were optimistic that plans to lobby for 25 percent — or between $25 million to $30 million — of the state's portion of severance tax to the counties of origin, would fly. But bit by bit support they had began to fade. At a meeting earlier this month with Lt. Gov. Gary Herbert and Rural Affairs Coordinator Gayle McKeachnie, they got the message that trying to take upwards of $30 million from the state's budget to aid counties impacted by natural resource production would be impossible.

"There was opposition from governor's office and both legislative bodies.

"The (oil and gas) industry wasn't behind it and trade unions were totally opposed to it," said Sen. Beverly Evans, R-Altamont. "I finally said, 'We need to just be honest and tell the counties you don't have the support and it's just not going to go through.' "

The two counties had planned to use some of the money from severance tax to aid oil and gas companies by upgrading infrastructure in the oil fields.

That's one reason Ross said he found it "disappointing that a good share of the industry was not willing to work to make the counties better."

Industry representatives said earlier that they would not support the measure because of the auditing authority the legislation would give counties over oil and gas company records. The Utah Petroleum Association did not support the proposed severance tax legislation, and IPAMS (Independent Petroleum Association of Mountain States), which represents 400 clients in the oil and gas industry in 13 states, would not lend its backing.

Evans said that the concept — returning substantial amounts of money to impacted areas — "really was the right thing to do," but added, "you can't pull that kind of money out of the governor's budget after his budget has been set . . . there was no replacement money for that."

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