Colorado land trust officials say oil drilling setback Prop 112 would cut public school funding

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AURORA |  The Colorado State Land Board said public schools would lose hundreds of millions of dollars in funding if voters approve Proposition 112, which would increase oil drilling setbacks.

Proponents of the measure to increase the setback between oil and gas development and homes and schools to 2,500 feet stipulate the potential funding loss, but they maintain that public safety is paramount.

A Sept. 13 analysis focusing on the impact of Prop 112 estimates that had the 2,500-foot setback been in place over the last three years, the land board would have lost about $230 million of its approximate $338 million in net revenue.

The state land board was created at the time Colorado became a state, and is the second-largest landholder in the state. The vast lands were set aside in a trust to benefit education funding and other projects. Some lands have been sold off, but the bulk remain in trust. Land and oil leases produce the bulk of the land board revenues.

“School funding from trust lands will be reduced by 60 percent,” if Prop 112 is approved, according to the report.

The board contributed over $129.3 million to the $6.3 billion Department of Education budget for fiscal 2016-2017. Much of the funds go toward school construction.

There are about 2,600 wells on land leased by the land board. Oil companies have drilled wells on these lands on a wide variety of landscapes, including natural features that would invoke the larger setback, such as  “vulnerable” areas like reservoirs.

The land board would still generate considerable money for schools should voters approve Prop 112, just much less of it, officials said.

“The State Land Board can still earn millions and millions for school children without actual development,” said Kristin Kemp, a spokesperson for the land board.

Kemp said the analysis takes into account whether operators of wells leased by the state board are drilling vertically or horizontally. Sub-surface mineral rights that are off limits under Prop 112 could still be accessed by drilling horizontally for miles underground.

A consortium of oil production rights proponents say they prompted the study, according to Colorado Alliance of Mineral and Royalty Owners President Neil Ray.

“(Prop 112) is so devastating to schools,” said Ray. “Industry and mineral owners are very much aligned on Prop 112.”

CAMRO represents about 180 families in Colorado aiming to protect their property or mineral rights, said Ray, which can be an income source when leased to oil and gas operators.

Ray said he is concerned that the Colorado Legislature would be unable to offset the lost revenue because of Colorado’s Taxpayer’s Bill of Rights, which inhibits the state’s ability to raise taxes.

Proponents for the increased setback say safety, not money, is what drove them to put the measure in front of voters.

Russell Mendell, a spokesperson for Colorado Rising – the group behind Prop 112 – said Coloradans are “terrified of sending their kids to schools next to drilling” and cited Bella Romero middle school in Greeley. The controversial case involved drilling adjacent to a school football field.

“Quality of life is the number one indicator for a robust economic outlook,” Mendell said.

Mendell also raised concerns that Amendment 74, a rival ballot initiative backed by the oil and gas industry, would drain state education coffers by enabling industry to sue governments over environmental and health regulations.

Oil production critics question the validity of the land board report.

Jeremy Nichols, the Climate and Energy Director for environmental group WildEarth Guardians, said the land board study is “extremely overblown.”

“It’s notable that the report acknowledges 88 percent of all leased state lands are not even being developed for oil and gas, a sign that Prop 112’s impact on leasing will, at best, have little impact on leasing and leasing revenue,” he said.

Nichols also said that long-term accounts of public health and state revenue are absent from the report, although Prop 112 would “definitely impact drilling.”