Colorado Loses State Supreme Court Case Over Oil & Gas Taxes

DENVER (CBS4)- The State of Colorado may have to come up with hundreds of millions of dollars by next week to pay the Oil & Gas Industry because the state lost an important case at the Colorado Supreme Court.

The case centers on tax deductions BP Energy said it is entitled to but the state denied. The Colorado Supreme Court sided with BP.

The ruling paves the way for not only BP but other oil and gas companies to file for refunds that date back three years.

Lawmakers are still trying to figure out how many companies were denied the deductions but they're bracing for a flood of refunds.

"So we're looking at legislation to pass in the waning days of the session to set up the process for these refunds to be handled because right now it throws our entire budget out of balance, there are consequences to natural resources and local governments rely on severance tax funding are pretty significant. This is a pretty major development and we're scrambling to try to figure it out," said Sen. Pat Steadman, a Democrat representing Denver.

The companies will be able to claim the deductions going forward which means the decision impacts future revenue generated by oil and gas severance taxes. Those taxes fund everything from schools to water projects and could have serious implications for local governments.