Assessed valuations paint a stark landscape for taxing authorities/taxpayers
September 20, 2010
Oil and gas production revenues for Garfield County, Colorado have dropped 56 percent in the past year, resulting in shattering reductions in upcoming property tax payouts to local taxing districts in 2011. When oil and gas total production valuation in Garfield County reached its peak last year of $3.06 billion, it provided nearly 75% of the assessed valuation, bringing in added tax revenue for fire departments and other tax-supported entities serving citizens. Then, a severe drop in the price of natural gas resulted in an across the board curtailment of drilling activity, which, along with low prices for gas being sold, resulted in a drastic drop in taxable oil and gas revenue. The projected oil and gas total valuation for this year has decreased to $1.34 billion, which may devastate local taxing districts in 2011 when tax bills are due and payable.
While the severe drop in gas revenues is big news, it’s not the only bad news. Taxing authorities will see another reduction in valuation the following year (2012) when tax bills come out for the 2011 re-appraisal of all county property conducted every odd year by the Garfield County Assessor’s office. The re-appraisal will reflect the considerable drop in valuation for residential and commercial properties that occurred in the local real estate market in 2009 and the first half of 2010. “Early projections are indicating a significant decline in valuation, depending on the area,” said Garfield County Assessor John Gorman.
A final piece of bad news is for property owners in the oil and gas drilling areas of Garfield County is that they will be left holding a big tab for previously approved bond issue projects. While the oil and gas revenues were booming; that industry contributed the lion’s share of revenue for the bond payments. Now that revenues have crashed, taxpayers will still need to make those bond payments, so their tax bills for those bonds will eventually increase to cover the loss in taxes from oil and gas valuation. “It’s also a time bomb for the state budget, as the equalization payments for school district funding becomes due,” said Gorman.
Gorman encourages residents to get involved now with their local taxing authorities’ budget processes. In November and early December, when taxing authority boards have their budget hearings and accept public comment, they will already need to know their constituents’ wishes to determine which services to cut.”
There is some good news, according to Gorman, “Over the years, Garfield County government (the Board of County Commissioners and the county administration) has taken an appropriately conservative financial position. They have wisely built a substantial “rainy day fund,” which may now be used to weather the coming lean time without drastically cutting county services.”
Again, on the positive side, oil & gas industry audits by the assessor’s office have found mistakes in reporting that has resulted in about $6 million being collected for taxing districts in Garfield County. Of that, $4.3 million was distributed to school districts, fire districts and other taxing authorities in January of 2010. More will be given out to the same districts in January 2011.