HOUSTON, Dec. 23 (UPI) — Colorado cities with the potential to host hydraulic fracturing campaigns could lose up to $1 million in tax revenue if bans are enforced, analysis finds.
The Colorado Supreme Court heard arguments in early December on whether state or local governments have the authority to restrict hydraulic fracturing, a controversial drilling practice known also as fracking. A lower court threw out restrictions imposed by five Colorado cities and challenged by the Colorado Oil and Gas Association.
Analysis of well activity in Colorado from energy consultant group Wood Mackenzie finds between $750,000 and $1 million in potential tax revenue would be lost if fracking restrictions are enforced.
“Although we are likely months away from the court’s decision, the eyes and ears of the oil and gas industry are fixed on this case, since it will likely set a legal precedent for fracking regulation in other states,” the group said in a statement.
The office of Colorado Gov. John Hickenlooper released its quarterly economic forecast earlier this week, saying the state economy will grow, but not at the robust levels seen last year.
“At the present time, the contraction in the oil and gas industry, a tight labor market, and various global economic headwinds are contributing to slower growth in employment levels and in some categories of state taxes,” the office said.
The state government expects revenues in the general fund to increase 2.1 percent for the fiscal year ending in 2016, a forecast that’s 1.7 percent lower when compared with September. The state revenue and economic forecast for September said revenue should increase 3.9 percent through fiscal year 2016, a 0.8 percent contraction, or $78.9 million, from a June forecast from the state.
Colorado’s government said the impact of lower crude oil prices, down about 40 percent from last year, has only recently created strains. With the industry pulling back in part because of lower crude oil prices, Colorado expects a job growth rate of 2.8 percent for full-year 2015, nearly a full percentage point less than 2014.
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