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DNR warns severance-tax volatility could squeeze parks, avalanche forecasting and water projects
Summary
At a Joint Budget Committee hearing, DNR officials told lawmakers that volatile severance-tax revenue has reduced the operational reserve well below its statutory target and that without backfills some programs (including avalanche forecasting and some Parks & Wildlife functions) would face cuts or be refinanced into already-constrained cash funds.
Dan Gibbs, executive director of the Colorado Department of Natural Resources, opened the agency's FY27 briefing by describing DNR's eight divisions and the governor's proposed investments in lands, waters and wildlife.
Carly Jacobs, DNR chief financial officer, walked the committee through the department's severance-tax picture, saying DNR receives 50% of statewide severance-tax revenue after statutory diversions and that that share is split equally between the Severance Tax Perpetual Base Fund (for water projects administered by the CWCB) and the Severance Tax Operational Fund (which supports DNR operations and about 141.9 permanent FTE). Jacobs cited the December 2025 forecast and said, "Table 1 on page 1 shows the December 2025 OSBP severance tax revenue forecast, which anticipates revenue distributions of $51,400,000 to DNR in total this fiscal year," splitting roughly $25.7 million to each fund.
Jacobs warned committee members that severance is highly volatile and that historic refunds in FY24 and FY25 had substantially depleted reserves. She described the operational fund reserve standard as "equal to 200% of appropriations" and provided a concrete example: "the reserve requirement for the current fiscal year is $72,000,000. Under the current forecast, we will end the fiscal year with $10,800,000 in the bank," roughly 15% of the allowable reserve.
Committee members asked what programs would be affected if operational severance revenue were reduced or moved to other funds. Jacobs said some programs have no alternative cash source and would require general-fund backfills (for example, certain mine-safety training and roughly half of the Avalanche Information Center's funding). For others, the department could shift obligations between cash funds, but that frequently "displaces funding for other functions," she said: refinancings that move CWCB operational appropriations into the construction fund would reduce water-project capacity overall, and CPW would need to absorb up to $11.5 million of programming into already-constrained parks or wildlife cash funds, likely resulting in reductions to staffing, operating hours, maintenance or capital projects.
DNR officials repeatedly told members they monitor forecasts closely and that the department's internal operational reserve is the principal tool to manage the volatility. Jacobs said she would provide the committee with the underlying forecast models to show the calculations and assumptions.
What happens next: DNR staff said they will provide models and follow-up detail to JBC staff and that the agency stands ready to work with the committee to identify tradeoffs or general-fund backfills where statutory alternatives do not exist.
Sources: Department of Natural Resources testimony to the Joint Budget Committee; statements by Carly Jacobs and Dan Gibbs.
