Moffat County trims budget because of oil and gas slump
Craig Daily Press
CRAIG — Like Garfield and Mesa counties, Moffat County is tightening its belt as it begins to grapple with sharp drop-offs in revenue tied to an oil and natural gas slump.
Moffat’s 2017 budget, approved last week, includes $6 million in spending cuts excluding Memorial Hospital, the county’s largest component unit.
And though 2017 promises to be an austere year for county agencies, the cuts aren’t nearly so dramatic as those to come in the next five years if revenue projections hold true.
The main culprit for the shortfall is a triple decline in property taxes, severance taxes and mineral lease revenues, amounting to a $2.3 million decrease in revenue since 2014, according to the county’s budget.
Property taxes are the second largest source of revenue for the county, accounting for more than a fifth of its total revenue during the last three years. But property taxes are based on valuation, which dropped by nearly $51 million, or 11 percent, from 2015 to 2016, the largest year-to-year drop since 1990. The current assessed value of $409.7 million is the lowest it’s been since 2005.
“Our main issue here, not only in Moffat County but across the state of Colorado, is that anyone who has any oil and gas presence has taken a significant shift this year in their oil and gas values,” said Moffat County Assessor Chuck Cobb. “About $50 million of that drop was in oil and gas, so that is the area that has made a significant shift in our value.”
In Garfield County, commissioners cut more than $15 million from the county’s expenditures for the 2017 budget to deal with a $17 million decline in property tax revenue tied to a dip in oil and gas production. The county was able to tap reserves to keep services at their current level, but the county’s library district, which has its own tax levy, cut staff and hours to deal with its revenue decline.
Mesa County approved a budget for 2017 that’s 1 percent less than the county planned for 2016 with commissioners concerned that 2018 could be more difficult.
In Moffat County, nearly three-quarters of property value lies in natural resources — such as oil, natural gas and coal — and public utilities, such as railroads and cell towers. Only 12 percent of the county’s property valuation lies in residential property, which has held fairly steady since last year.
Severance tax, which is levied on the state’s oil and gas industry, has also bottomed out along with oil and gas prices. Half of severance taxes collected by the state are distributed back to county governments, and Moffat County received about $420,000 less in 2016 than in 2015 — a 65 percent drop — according to numbers from the Colorado Department of Local Affairs.
As news of falling revenues rolled in this summer and fall, Moffat County commissioners were forced to make adjustments to next year’s budget and to begin developing a strategy for the years to come.
“The one thing we wanted to do initially is a hiring freeze because employees are a big part of puzzle,” said Commissioner Chuck Grobe. “That gives us the opportunity to evaluate what services will be impacted going forward.”
The commissioners passed a resolution instituting a hiring freeze, which is projected to save the county approximately $3 million over the next five years if left in place. It prohibits the replacement of personnel or the creation of new positions except under specified circumstances; positions necessary to public safety or that are essential to the function of a department may be granted an exception.
In addition to the freeze, several positions were also cut in 2017, including the building inspector, a mapper in the assessor’s office, and emergency manager, which was merged into a sheriff’s deputy position. Two other positions — one in the road and bridge department and another in the library — were also cut.
Finally, county officials discovered they could find $2 million in savings by trimming department budgets to 2015 expenditure levels plus 2 percent inflation, according to Tuesday’s budget presentation.