One of the devious ways the federal government contrives to make spending cuts under "sequestration" painful to ordinary Americans has been to withhold a portion of royalty payments to states a chunk of which, in Colorado's case, then gets filtered down to communities affected by mineral and energy development.
The Budget Control Act was of course meant to trim federal spending. But a tax transfer to states enshrined in law decades ago to offset the impact of mineral development is not in any normal sense a federal expenditure.
In the first place, Washington has no discretion over the transfer or use of funds. It functions as the collection agent, keeping half of the revenue and distributing the rest.
So where do federal officials get the idea they can withhold a portion of payments and even demand return of part of previous payments?
The bipartisan members of the Western Governors' Association would like to know, too, and in a letter signed by Colorado's John Hickenlooper and Utah's Gary Herbert back in May, posed that question to Agriculture Secretary Tom Vilsack.
Those governors are still waiting for an answer.
"Any comparison between a mineral receipt transfer and an appropriated expenditure is fundamentally flawed," the governors wrote. "The federal government has no option except to transfer these pass-through funds to qualifying states."
Meanwhile, they wryly note that the federal government hasn't reduced its share of royalities. "Should not the federal share of royalties be reduced by a like margin?" they ask.
Sean Paige of the Colorado branch of Americans for Prosperity made a similar point in a recent letter to Attorney General John Suthers, urging Colorado to resist this federal move.
"These aren't gifts from the Treasury, which can be withheld at Washington's discretion," Paige noted, "but royalty payments directly derived from energy development activities that occur on federal lands in Colorado, part of a contractual arrangement with Washington dating back to the Mineral Land Leasing Act of 1920."
It would be a bad precedent if Washington's unilateral withholding of royalities were to succeed, so we hope the state does indeed resist.
--The Denver Post, July 10