Garfield County officials foresee property tax ‘bomb’ in 2011
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS, Colorado ” Garfield County officials forecast a property tax “bomb” in 2011 due to reduced oil and gas operations in the county this year.
Property tax is about 1/3 of the county’s total revenue ” larger than any other source. About 2/3 of it comes from property tax on the oil and gas industry, and the primary driver of that is oil and gas production, according to a presentation Tuesday by county budget analyst Theresa Wagenman.
County manager Ed Green said, “We’re down to 33 rigs right now and the projection is that we will be down to 23 very shortly, and the problem with maintaining production is once you put a well in operation, it immediately starts to decline in terms of its output.”
The number of rigs in the county reached what some say could become the highest number ever of 102 in the third quarter last year. Wagenman said the decreases are due to the high cost of drilling in the Piceance Basin and uncertainty over the regulatory environment here.
But Commissioner Tresi Houpt questioned the assertion and said the decreases are due to the dropping value of natural gas and the inability to get gas to the market.
“I’m sorry, but I take real exception to that. It’s a very political statement,” Houpt said.
The effects of decreased oil and gas production now won’t show up in county property tax revenues this year because the assessed value of the property being taxed lags about two years behind the present.
County assessor John Gorman projected roughly a 35 percent decrease in property tax revenue in 2011 from 2009 levels.
“I say 35 percent reduction because I’m thinking positively,” he said. “We could have a 60 percent reduction easily in the value of gas taken out of the ground in 2009 compared to 2008.”
The budget forecast shows total county revenues climbing from $88.1 million this year to $93.5 million in 2010, then dropping to $76.7 million in 2011, and starting to pick back up again in the following years. The forecast shows revenues less then expenditures by about $13.3 million through 2013. The county ended 2008 with nearly $70 million total in its various fund categories and is expected to have $88.4 million in 2010.
Wagenman said the county can “weather the storm,” but she suggested considering a hiring freeze or hiring fewer new positions in 2010 and 2011. She also recommended scrutinizing budgets more closely, setting aside “rainy day” funds, and allocating more cash into the general fund so less of it is flagged for specific uses. Green is also instituting changes in the county’s vehicle fleet he says will save $250,000 a year.
In addressing the question of whether to cut expenses, county commissioners voted unanimously Tuesday to retain nine large capital expenditures in the 2009 budget worth about $12 million dollars. The approval came after a battle over semantics in motions and whether to include the phrase “not to exceed” before a budgeted amount.
Houpt said the phrase should be included, but Commissioners John Martin and Mike Samson said it was unnecessary because a project with cost over-runs would have to come back before commissioners regardless.
“So we’re not looking at how to put together a more conservative approach to budgeting?” she said. “We aren’t concerned with how much we spend is the message that’s being sent if we don’t go forward with not to exceed.”
Samson said later in the discussion, “I see your philosophical argument, Tresi, but we’re not going to let this get out of control. Let’s give these people the flexibility to do what they need to do.”
Houpt said she wants to make sure commissioners are not locked into increases before they come back for further approvals. Martin said “there is no other county in the state that is in better shape and has been more fiscally restrained.”
The items commissioners decided not to ax from the budget included $2.5 million for a new human services building, $3.5 million for a new sheriff’s building, and about $3.5 million for infrastructure at the county airport.
Contact Pete Fowler: 384-9121
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