A Bill for an Act
Page 1, Line 101Concerning the creation of the future of severance taxes
Page 1, Line 102and water funding task force, and, in connection
Page 1, Line 103therewith, making an appropriation.
Bill Summary
(Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov/.)
Water Resources and Agriculture Review Committee. The bill creates the future of severance taxes and water funding task force (task force).
The department of natural resources is required to contract with a third party to conduct a study on severance taxes and water funding and develop recommendations for ways to continue funding water needs in the face of decreasing severance tax revenue (study). The purpose of the task force is to work with the third party to conduct the study and develop recommendations.
No later than January 15, 2026, the third party must submit a draft report, detailing the results of the study and any recommendations, to the department of natural resources and the task force for review. The task force is required to provide input on the draft report. No later than July 15, 2026, the third party must submit a final report, which incorporates the input of the task force, to the water resources and agriculture review committee (committee). The task force must present the final report to the committee during the 2026 legislative interim.
This Unofficial Version Includes Committee
Amendments Not Yet Adopted on Second Reading
Page 2, Line 1Be it enacted by the General Assembly of the State of Colorado:
Page 2, Line 2SECTION 1. Legislative declaration. (1) The general assembly finds and declares that:
Page 2, Line 3(a) Severance taxes provide a source of revenue to the state and the state's political subdivisions;
Page 2, Line 4(b) A portion of revenues derived from severance taxes is used to fund the development and conservation of the state's water resources;
Page 2, Line 5(c) Another portion of revenues derived from severance taxes is
Page 2, Line 6made available to local governments to offset the impact created by nonrenewable resource development;
Page 2, Line 7(d) The state also relies on severance tax revenue to fund staff
Page 2, Line 8positions in the department of natural resources and the department of local affairs;
Page 2, Line 9(e) In times of need, the state has relied on severance tax revenue
Page 2, Line 10to backfill the state budget, which depletes funding from programs that would otherwise benefit local governments; and
Page 2, Line 11(f) There is a need to study how the state can:
Page 2, Line 12(I) Avoid using severance tax revenue to backfill the state budget
Page 2, Line 13in the future;
Page 3, Line 1(II) Begin to pay back the severance tax revenue previously used to backfill the state budget; and
Page 3, Line 2(III) Continue to fund water needs and grants to local
Page 3, Line 3governments without relying on the revenues derived from severance taxes.
Page 3, Line 4SECTION 2. In Colorado Revised Statutes, add 37-98-106 as follows:
Page 3, Line 537-98-106. Future of severance taxes and water funding task
Page 3, Line 6force - created - membership - third party to conduct study - report
Page 3, Line 7- definitions - repeal. (1) As used in this section, unless the context otherwise requires:
Page 3, Line 8(a) "Committee" means the water resources and
Page 3, Line 9agriculture review committee created in section 37-98-102(1)(a)(I).
Page 3, Line 10(b) "Task force" means the future of severance taxes and
Page 3, Line 11water funding task force created in subsection (2) of this section.
Page 3, Line 12(c) "Third party" means the third party hired by the
Page 3, Line 13department of natural resources pursuant to subsection (5)(a) of this section.
Page 3, Line 14(2) (a) The future of severance taxes and water funding task force is created in the department of natural resources.
Page 3, Line 15(b) The task force consists of the following members:
Page 3, Line 16(I) The executive director of the department of natural resources or the executive director's designee;
Page 3, Line 17(II) The director of the Colorado water conservation
Page 3, Line 18board created in section 37-60-102 or the director's designee;
Page 4, Line 1(III) The commissioner of agriculture or the commissioner's designee;
Page 4, Line 2(IV) A representative of an environmental advocacy
Page 4, Line 3organization, appointed by the speaker of the house of representatives;
Page 4, Line 4(V) A representative of the oil and gas industry with
Page 4, Line 5experience in severance tax issues, appointed by the minority leader of the senate;
Page 4, Line 6(VI) A representative of a water conservation district, appointed by the president of the senate;
Page 4, Line 7(VII) A representative of the agriculture industry with,
Page 4, Line 8to the extent possible, experience in the intersection of
Page 4, Line 9agriculture, water projects, and the oil and gas industry,
Page 4, Line 10appointed by the minority leader of the house of representatives;
Page 4, Line 11(VIII) A county commissioner from a county that contains oil and gas operations, appointed by the governor; and
Page 4, Line 12(IX) An elected municipal official or city or town
Page 4, Line 13manager from a city, town, or city and county that has been
Page 4, Line 14socially or economically impacted by the development,
Page 4, Line 15processing, or energy conversion of oil and gas operations
Page 4, Line 16subject to taxation under article 29 of title 39, appointed by thegovernor.
Page 4, Line 17(3) The purpose of the task force is to consult and
Page 4, Line 18coordinate with the third party in the development of a study
Page 4, Line 19regarding the future of severance taxes and water funding in
Page 4, Line 20the state.
Page 5, Line 1(4) (a) No later than September 1, 2025, the appointing authorities shall make appointments to the task force.
Page 5, Line 2(b) The department of natural resources shall provide staff and other resources to support the work of the task force.
Page 5, Line 3(c) The task force shall conduct meetings as necessary to perform its duties pursuant to this section.
Page 5, Line 4(d) The members of the task force serve without
Page 5, Line 5compensation but may be reimbursed for any reasonable
Page 5, Line 6expenses incurred in the performance of the duties required under this section.
Page 5, Line 7(5) (a) The department of natural resources shall
Page 5, Line 8contract with a third party to conduct a future of severance
Page 5, Line 9taxes and water funding study. The purpose of the study is to
Page 5, Line 10explore ways to continue funding water needsand energy
Page 5, Line 11impact grants distributed pursuant to section 39-29-110 (1)(b)(I)
Page 5, Line 12in the face of the decreasing availability of severance tax
Page 5, Line 13revenue collected pursuant to article 29 of title 39 and to
Page 5, Line 14develop related recommendations.The study must focus on
Page 5, Line 15identifying ways to alleviate the need to transfer revenues
Page 5, Line 16derived from severance taxes to the general fund and to
Page 5, Line 17replace severance tax revenue that was previously transferred.
Page 5, Line 18(b) No later than January 15, 2026, the third party shall
Page 5, Line 19submit a draft report to the department of natural resources
Page 5, Line 20and the task force describing the study's findings and any
Page 5, Line 21recommendations. The task force shall review and provide input
Page 5, Line 22on the draft report.
(c) No Later than July 15, 2026, the third party shall:
Page 6, Line 1(I) In consultation with the department of natural
Page 6, Line 2resources and the task force, create a final report that
Page 6, Line 3incorporates the task force's input regarding the draft report; and
Page 6, Line 4(II) Submit the final report to the committee.
Page 6, Line 5(d) Following the submission of the report to the
Page 6, Line 6committee, the task force shall present a summary of the report to the committee during the 2026 legislative interim.
Page 6, Line 7(6) The task force shall be funded solely with money from
Page 6, Line 8the severance tax operational fund created in section 39-29-109 (2)(b)(I).
Page 6, Line 9(7) This section is repealed, effective December 31, 2026.
Page 6, Line 10SECTION 3. Appropriation. (1) For the 2025-26 state fiscal
Page 6, Line 11year, $198,592 is appropriated to the department of natural resources for
Page 6, Line 12use by the executive director's office. This appropriation is from the
Page 6, Line 13severance tax operational fund created in section 39-29-109 (2)(b)(I),
Page 6, Line 14C.R.S. To implement this act, the office may use this appropriation as follows:
Page 6, Line 15(a) $192,566 for personal services; and
(b) $6,026 for operating expenses.
Page 6, Line 16(2) Any money appropriated in subsection (1) of this section not
Page 6, Line 17expended prior to July 1, 2026, is further appropriated to the department through December 31, 2026 for the same purpose.
Page 6, Line 18SECTION 4. Act subject to petition - effective date. This act
Page 6, Line 19takes effect at 12:01 a.m. on the day following the expiration of the
Page 6, Line 20ninety-day period after final adjournment of the general assembly; except
Page 7, Line 1that, if a referendum petition is filed pursuant to section 1 (3) of article V
Page 7, Line 2of the state constitution against this act or an item, section, or part of this
Page 7, Line 3act within such period, then the act, item, section, or part will not take
Page 7, Line 4effect unless approved by the people at the general election to be held in
Page 7, Line 5November 2026 and, in such case, will take effect on the date of the official declaration of the vote thereon by the governor.