Moffat County feels pinch of oil, gas decline; plans for $14M in cuts by 2021
Library, museum could lose funding in years to come
December 18, 2016
Craig — Moffat County is tightening its belt as it begins to grapple with sharp drop-offs in revenue streams. The 2017 budget, approved Tuesday, includes $6 million in spending cuts excluding The Memorial Hospital, its 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 property 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."
Nearly three quarters of Moffat County's 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.
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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 Tuesday 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 two percent inflation, according to Tuesday's budget presentation.
Also worth noting is that half of the total $6 million in reduced spending is actually due to the completed Shadow Mountain project, which was budgeted at $3 million in 2016.
But more extreme cuts could be on the way in 2018 and beyond, as commissioners consider defunding non-mandated services such as the library, the Museum of Northwest Colorado and the cemetery. The five-year plan slashes $500,000 from non-mandated services in 2018 and an additional $1.1 million in 2019.
"We will have to look at how to maintain those services but without county money, because the county really can't afford it anymore," said Moffat County Finance Director Mindy Curtis.
Curtis explained that in other counties, special tax districts create dedicated funding sources for resources such as the library, the cemetery or parks and recreation, but Moffat County pays for these services out of its general fund.
Commissioners found that without making these cuts, current spending levels would leave the county $14 million short by 2021. The five-year plan is not set in stone, but meant to guide the incoming board of commissioners in their decision-making.
"They may have other ideas or other thoughts that may be better or they may go their own direction," Grobe said, who will be stepping down in January. "But (the budget) needs to be looked at right away, not waiting until next October to make these decisions."
Despite the pinch, the commissioners named economic growth as a continued priority. Economic development efforts in Moffat County have been picking up steam over the past couple years, and despite the bleak outlook, Michelle Balleck — executive director of Craig Moffat Economic Development Partnership — is still optimistic.
"I think it's smart that the city and county and our community think about how we can do more with less," Balleck said. "I think our economic situation is forcing us to think about what our real priorities are and how we can do things most efficiently."
One economic boon on the horizon is the TransWest Express transmission line, which will provide additional property tax revenue once it's operational, around 2021 at the earliest. The Collom pit expansion at Colowyo Coal Mine also promises to bring in additional revenue once operational.
But with the unpredictability of the natural resource industry, both politically and economically, county officials will have to remain nimble to stay afloat.
"It's not something that we've done, it's something that we now have to adjust to," Curtis said. "We're just trying to live within our means at this point."