Property values tumble on Western Slope
Property values across the Western Slope are expected to tumble by hundreds of millions of dollars, a blow that has the potential to cut to the quick local governments that have spent the past couple of years shedding jobs and trimming spending as other forms of revenue have fallen.
In Garfield and Rio Blanco counties, where a resilient oil and gas industry has offset the decline in residential property value, overall assessed valuation and property tax revenue will increase next year.
But elsewhere, the drop-off in property values so welcomed by house-hunters looking for bargains is not as welcomed by local government officials.
Most public entities anticipated the slide in property values and tax revenue and adjusted their budgets months before notices hit mailboxes this spring. But for local governments, schools and special districts here in Mesa County and elsewhere in the region, the recession-driven decline could spell trouble if the real-estate market doesn’t rebound in a year or two.
“He’s looking at a very pessimistic marketplace,” Montrose County Manager Jesse Smith said of Assessor Brad Hughes, who is forecasting another slide in the revaluation scheduled for 2013. “If that’s case, we’ve got to get a finer-tooth comb.”
Counties assess property values every two years and use those valuations to calculate property taxes that are due the following two years. The recently completed revaluation used market sales data from Jan. 1, 2009, through June 30, 2010, and will cover taxes paid in 2012 and 2013.
County assessors still are processing appeals filed by property owners and won’t certify the change in assessed values until July or August. But most elected officials and special-district leaders have at least a rough idea of how much less money they will have to work with as they begin preparing their 2012 budgets.
Mesa County revenue
Mesa County officials project to take in approximately 16 percent less property tax revenue — about $4 million — next year. Property taxes account for 19 percent of the county’s budget.
Commissioners have spent the past couple of years preparing for that decline, slashing $12 million in spending and more than 40 positions heading into this year.
Commissioner Craig Meis said he believes the county is in pretty good shape financially and noted overall revenue is better than expected. Through May, county sales tax receipts were up 5.5 percent over the same period last year. And Meis doesn’t expect to institute another round of layoffs like the county has the past two years. Still, he said, to save money, commissioners will consider not filling some positions when they’re vacated.
“We certainly are going to make sure we’re tightening our belts and looking at every position that comes open, because that’s where the savings are at,” Meis said.
Frank Cavaliere, chief of the Lower Valley Fire Protection District, which relies exclusively on property taxes to subsidize its $2.1 million budget, said such revenue will be down next year, although he doesn’t know yet by how much. He said he doesn’t anticipate any reductions in service and noted that operating a largely volunteer fire department saves money on staffing.
In Delta County, assessed valuations will slip between 6 and 8 percent, according to Commissioner Bruce Hovde. He said commissioners are just beginning 2012 budget discussions and will try to save money by eliminating open positions and cross-training employees to perform multiple duties.
“We’re trying to cut where we can,” he said.
Montrose County will have to find a way to make up for an estimated 8.5 percent decrease in assessed valuations, which translates to about $2.9 million, according to County Manager Jesse Smith. Property tax dollars make up about a quarter of the county’s total revenue.
Smith said the county anticipated the decline in assessments, cutting operational expenses more than 8 percent this year to avoid dipping into its $13 million general fund balance. What it isn’t prepared for, but expects to happen, is another reduction when property values are assessed in 2013.
Natural gas production
In Rio Blanco County, where assessed values from oil and gas and other natural resource production make up almost 90 percent of the county’s $1.27 billion in total assessed values, Assessor Renae Nielson is forecasting a 12 percent climb in valuation.
Garfield County also will realize the benefit from stabilizing natural gas prices and production that has held steady and is rising. Even though the value of vacant, residential and commercial land fell anywhere from 10 to 40 percent, the overall assessed value in the county is expected to ratchet up 5 to 10 percent on the strength of a 25 percent boost in the assessed value of natural gas production, Assessor Jim Yellico said. The assessed value of gas production accounts for nearly 60 percent of Garfield County’s total assessed value.
“They were very happy,” Yellico said of county leaders’ reaction to the jump in revenue.
The news comes as a relief to agencies such as the Rifle Fire Protection District, which absorbed a 50 percent hit to its $4 million operating budget last year. Fire Chief Mike Morgan said he’s waiting on the official valuation for his district but doesn’t expect to have to reduce spending further. It’s likely, though, the district will have to set aside less money for future capital purchases, as it did this year.
“We might have to run an engine a few years longer,” he said.
The financial picture is dimmer for entities such as Glenwood Springs-based Colorado Mountain College, which is forecasting a 26 percent drop in property tax revenue and a 23 percent decline in state funding for the 2011–12 academic year. The property tax the college collects from the six counties in its district covers 71 percent of its general fund, according to college spokeswoman Debbie Crawford, and those resort counties are taking the biggest hit in assessed values.
College officials expect the decline in revenue to be partially offset by an increase in enrollment and a 9 percent tuition hike that takes effect this summer. Of its main sources of revenue — state dollars; property tax revenue from its mill levy, which is set by the college board of trustees; and tuition — the college has the most control over tuition revenue. Crawford didn’t rule out another tuition increase should the college lose more funding.
“I can’t speak for what our trustees might do for tuition, but that is one area of our funding that we do have control over,” she said. “But at the same time, we really want to stay among the most affordable options in the state for our students.”