Pot uncertainty could pose future budget questions in Parachute
PARACHUTE — The approaching budgetary year for the town looks slightly brighter than previously thought, a fact town officials attribute to opening the door to recreational marijuana businesses. However, with a ballot issue to ban the businesses slated for November of 2016, it’s unclear if the projected financial relief from the industry will be felt in 2017.
Town officials previously hinted at the possibility of grand-fathering in businesses already operating, if the ban passes. Speaking after a meeting Dec. 10, during which trustees approved the 2016 budget, Stuart McArthur, town manager, said there is no legal precedent on the matter.
“We don’t know,” McArthur said.
Michael Elliott, executive director of the Marijuana Industry Group, said he was unaware of such as situation playing out elsewhere in the state since the passage of Amendment 64 in 2012.
In a presentation to trustees prior to the passage of the 2016 budget, McArthur painted a grim financial picture for the town, which has historically relied on energy exploration and development.
The number of natural gas well starts has slumped from 1,689 in 2008 to 138 in 2015, and the number of rigs has fallen from nearly 80 in 2008 to a current three. With that roller-coaster ride taking a steep and continued drop starting in the past year, the town’s sales tax revenue has dropped from $1.08 million in 2013 to a projected $860,031 for 2015.
Further, technological advances in the industry mean once the energy sector does turn around, operators will rely on fewer employees — the same employees the town has relied on for bolstering sales tax revenue.
In addition to the drop in sales tax, assessed property values are expected to decrease by approximately $1 million and the town is anticipating a decrease in funds from severance tax and federal mineral leases totaling $100,000.
The town has anticipated the decline in revenue due to the industry slow down as best it could, McArthur said. That anticipation led, in part, to the proposal to repeal the marijuana ban.
To gain a better understanding of the financial impact of the marijuana industry, the town commissioned a study by BBC Research Consulting. Overall the industry is projected to generate $400,000 in 2016 from sales taxes, excise taxes, use taxes and building permits, according to McArthur. The study also factored in indirect benefits and the jobs created by the industry.
McArthur requested revisions be made to the study and was unable to provide a copy of the document prior to press time.
Should the ban pass in 2016 and marijuana businesses be shuttered, McArthur said there would be a significant impact on the 2017 budget. That would include a projected $600,000 decrease in general fund revenues, a possible 25 percent reduction in staff and a pause on most capital projects.
For now, the town is going forward in a conservative manner, McArthur said, but that uncertainty could manifest as the 2016 election approaches.
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