Have declining revenues hit bottom yet? Moffat County officials hope so
October 26, 2017
Source: Colorado Department of Local Affairs
CRAIG — Craig and Moffat County are no strangers to the boom-and-bust cycles of an energy-driven economy, but the headlines of 2017 could have anyone scratching their head and wondering why — despite big dreams and the best of intentions — so many institutions are struggling to make ends meet.
This spring, Colorado Northwest Community College announced a $1.3 million revenue shortfall, the Moffat County School District said it will be closing an elementary school, the county proposed $2.3 million in cuts for 2018 after cutting $6 million in 2017 and the city remains $1.75 million short, if it's to continue providing services at current levels.
Though the revenue formula is different for each entity, there are some common denominators that can help explain the budget crises that have swept Northwest Colorado's public institutions.
Underlying much of the decline is the drop in natural gas prices. The near standstill of oil and gas development in the county has massively impacted property tax revenues, as well as mineral lease and severance taxes, making the industry's slowdown a triple threat to tax-funded institutions.
In 2009, when oil and gas revenues reached their apex in Moffat County, the county's total assessed value peaked at more than $508 million. In 2017, that value dropped to less than $387 million, according to figures from Moffat County Assessor Chuck Cobb. Property taxes are collected based on that value.
About 78 percent of the drop is due to the decrease in value in oil and gas valuation since 2009, equaling $95 million.
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"Historically, going way back, natural resources, oil and gas and state-assessed (a category that includes power plants and transmission lines), makes up right around 75 percent of our value," Cobb said. "That's what drives tax value in Moffat County, so when you see a hit in any of those areas, the taxpayer takes a big hit."
Residential property, which accounts for only about 13 percent of the county’s 2017 property valuation, has seen a decrease of $4 million since 2016.
The sharp decline in property taxes in recent years has impacted the city, county and college especially hard.
Property taxes are the second-largest source of revenue for Moffat County and the third largest for the city of Craig, and they account for about a third of CNCC’s budget.
“Like everyone, we are experiencing very difficult financial times," said former CNCC President Russell George in August 2016.
George said about one-third of CNCC’s revenue comes from state appropriations, one third from tuition and one third from the local taxing district, or property taxes.
The county has seen property tax revenues decline by $2 million since 2010, with another $1.1 million in mineral lease and severance taxes evaporating since 2009.
Moffat County School District is also dependent on property taxes, however the state guarantees certain funding levels for every school based on the pupil count. When property taxes decline, the state coffers make up the difference.
"The amount of per-pupil funding has been going up, but when you have less kids, and most of your costs are fixed, that doesn't help," said the district Executive Director of Finance John Wall. "So, that's a pressure on us lately — declining enrollment, which is related to population decline."
Both Craig and Moffat County have seen a slow but steady drop in residents since 2010, according to figures compiled by the Colorado Department of Local Affairs. Through the course of the five years ending in 2015, Craig lost about 7 percent of its population.
The shrinking number of residents translates to lower enrollment — about 200 students fewer than in 2010 — and it also hurts the city and county's pocketbooks. Local sales tax revenues have remained largely flat for the city and county throughout the past 10 years, and the city projects 2018 revenues to dip slightly below 2008 levels.
Despite the challenges, local leaders are brainstorming how to diversify to a historically boom-and-bust economy, and officials are hoping for some relief.
"I'm hopeful … that oil gas has leveled off a little bit," Cobb said. "I'm hopeful that we've found the new bottom."
Sasha Nelson contributed reporting to this article.
Contact Lauren Blair at 970-875-1795 or lblair@CraigDailyPress.com or follow her on Twitter @LaurenBNews.
Source: Colorado Department of Local Affairs