WASHINGTON The Bush administration has proposed extending a new law that transfers millions of dollars in mineral royalties from states to the federal government money that states say could go for roads, education and other projects.
The change first became law as part of a catchall spending bill signed by President Bush in December. Proposed by the Bush administration in last year's budget and written into the bill by Congress, the provision gives the federal government a greater share of royalties from the extraction of minerals such as oil and gas on federal lands.
While the states and the federal government used to split those royalties 50-50, the split is now 52-48, with the federal government getting the larger share.
Bush suggested extending the provision by another year in his proposed budget released Monday.
The federal government stands to gain close to $40 million, according to 2007 estimates, as part of the $3.1 trillion budget.
Gary Strasburg, a spokesman for the Minerals Management Service, which is part of the Interior Department, said the extra money for the federal government is designed to recoup costs for paperwork and manpower required for collection and distribution of the royalty funds. But it will be deposited into the general treasury, he said.
Wyoming Gov. Dave Freudenthal says the change is "an absolute crime."
"What you've got is a federal government whose fiscal policy is absolutely bankrupt," Freudenthal said. "And so it has decided, 'Let's go to the states and see if we can pull money back."'
Freudenthal's state stands to lose the most. Wyoming generated an estimated $925 million in royalties in the 2007 budget year, and the state could lose $18 million to $20 million this year due to the change.
Several other Western states also stand to lose. New Mexico could lose more than $11 million, according to the 2007 estimates. California, Colorado and Utah could lose millions of dollars, and Montana could lose hundreds of thousands.
Other states that have a lot of drilling but fewer federal lands, such as Texas and Louisiana, would lose less money.
A spokeswoman for Utah Gov. Jon Huntsman Jr. said the governor is concerned about the cut.
"This is something we feel is obviously produced in our states, and we need to maintain the benefit of it here," said Lisa Roskelley.
Sixteen members of the U.S. House and Senate from nine states sent Bush a letter last week asking him not to include the cut in the federal budget, saying they oppose the government "taking money that is rightfully owed our states in order to pay for more federal bureaucracy."
A similar move implemented in 1991 and repealed in 2000 cost the states almost $250 million, the letter said.
California Sen. Dianne Feinstein, who sponsored the bill that made the change, said in a statement that she will review this year's budget and determine which parts of it will go into the bill. She did not comment on why Congress decided to go along with the Bush administration's original request to make the change.
Montana Rep. Denny Rehberg, a Republican member of the House Appropriations Committee, said the mineral royalties improve basic state services like roads and schools. He said he would work to reverse the change this year.