To the editor:
I am writing this letter in an effort to clear up confusion and misconception about county valuations, revenue limitations, mill levies and mill levy credits.
The county has never threatened to sue over state assessed value. What the county did was protest the value of Salt River Project, one of the partners in the Craig Station. This protest was filed with the Division of Property Taxation because Salt River's value was so far out of line with the other partners' values, especially considering Salt River's larger percent of ownership in the Craig Station Power Plant.
Agricultural values have never decreased by 35 percent. The confusion associated with this value is because in prior years, the valuation class report grouped agricultural residences with all the agricultural values. Currently, the agricultural residences are grouped with all residential property because the valuation method and assessment rate are the same. The agricultural values included in the class report are for agricultural land and agricultural outbuildings. From 2003 to 2004, agricultural values dropped 4 percent and then another 4.7 percent from 2004 to 2005.
The 5.5 percent revenue limitation has served us well. Before TABOR was passed in 1992, a local government's mill levy fluctuated with the increase or decrease in the assessed value of that entity. If the assessed value dropped, the mill levy was raised to generate the same revenue plus the allowed 5.5 percent if an entity chose to collect that revenue. Conversely, if the assessed value went up, the mill levy went down. The TABOR amendment prevents any taxing entity from raising its mill levy without a vote. This is what has created the ratchet-effect. Revenues can only be increased 5.5 percent over the prior year's revenue, even if that value was dramatically lower.
Moffat County's value dramatically dropped in 2003. This drop was mainly because of a drop in the assessed value of oil and gas. The 2003 oil and gas valuation was based on production and the selling price of the product in 2002. Production was steady in 2002, but the selling price was way down. This amounted to a $25 million drop in the value of oil and gas extracted from Moffat County.
To put this ratchet effect into personal perspective, let's say you earned $30,000 in 2003. In 2004, you were laid off and only earned $24,000. In 2005, you were called back to work full time, but you can only earn 5.5 percent over what you earned the previous year ($24,000 x 5.5 percent = $1,320 + $24,000 = $25,320). You have lost $4,680 from what you earned in 2003. Using this scenario, it will take 5 years to get back to the wage you earned in 2003, and this is not taking into account the cost of living increases you would have experienced during the 5-year period.
The county has not received and does not hold 1.2 million in excess revenue. The fact is that $269,400 in excess revenue from the 2004 tax roll is being collected this year -- 2005. If Referendum 1A passes and the current mill levy of 20.862 stays in effect, the county will collect $653,100 in excess revenue in 2006, the 2005 tax roll. This is a total of $962,500 in excess revenue that would be collected over 2 years. The term excess revenue is a misnomer. It is revenue collected over the 5.5 percent limitation based on a very low assessed value. Revenue was lost in the 2003 tax year (2004 collection year) because of the reduced valuation of oil and gas and the 5.5 percent revenue limitation makes it hard to cover this lost ground.
If Referendum 1A does not pass, this $962,500 will be refunded to property owners via a mill levy credit of 2.466 mills. No one will receive a check. The credit will be shown on the tax bill for 2006. The energy industry (coal mines, oil and gas, state assessed properties) makes up 80 percent of Moffat County's value. Consequently, 80 percent of the mill levy credit will got to the energy industry. The county has run mill levy credits in prior years, and I'm quite sure no one even noticed.
The energy industry has and will, by all indications, continue to add value to the county. With this increased value, demands for county services and resources also increase i.e. road maintenance, public safety, etc. These huge impacts may be difficult to handle if revenues cannot be used to keep up with the pace. The two pipelines being constructed in our county also will increase our assessed value, however, this increase will not take effect for several years. If the pipelines are completed in 2006, they will be valued in 2007 and the revenue will not be collected until 2008. All of these increases in value will be subject to the 5.5 percent limitations based on the prior year's value.
As previously stated, the 5.5 percent limitation has served us well. Before TABOR, the county could have collected the 5.5 percent revenue limitation in tax year 2004, because the mill levy would have been raised to collect the allowed revenue. Then as the assessed values increased, the mill levy would be lowered to account for the increase. This was the natural ebb and flow of the mill levy; TABOR has interrupted this natural flow.
Also, not afraid to sign.