La Plata County's 2017 budget reflects ongoing struggles from declining oil and gas property tax revenue.
In their 2017 budget message, County Manager Joe Kerby and Finance Director Diane Sorensen say, "La Plata County has relied on property tax revenues from the energy industry for far too long to support county services...A seismic shift has occurred with the energy industry, and our revenues are declining significantly as a result."
New revenue sources are needed, they say. "The county should continue to evaluate the implementation of a use tax as well as the possible implementation of growth impact fees. We also believe it is prudent to weigh the option of taxing marijuana," they said. "Our infrastructure demands are far exceeding the revenues available to maintain them. Without new revenue sources, the county will be forced to reduce levels of service."
The budget approved in December shows total spending of $77.47 million, including $59.6 million in operations spending, plus about $17.8 million in proposed one-time spending. The total is down $27.2 million from 2016. Most of the decline is for capital and one-time spending. Operations includes general government, the Road & Bridge Fund, and Department of Human Services.
Total county revenue is budgeted at $68.5 million for 2017, down about $11.4 million from 2016.
For the first time, county sales tax is projected to bring in more ($15.78 million) than property tax.
Property tax revenue for 2017 is projected to be $15.4 million, down from $29.4 million in 2010. Property tax revenue from natural gas has fallen from $17.6 million in 2010 to a projected $4.6 million for 2017. Back in 2007, the gas industry paid 66 percent of property taxes in the county. It was 60 percent in 2010, 44 percent in 2016 and is expected to be 30 percent in 2017.
Kerby and Sorensen said revenues are expected to decline again for 2018, and staff has already started considering how to deal with that, including possible reductions in levels of service and infrastructure projects, and evaluating fees for service. "The facts are clear," they said. "In order to correct this situation, we will need citizen support to increase La Plata County's revenues through property, sales, use taxes, and/ or excise taxes" or face reduced services.
County voters rejected a property tax increase for Road & Bridge in November. They rejected the same increase a year earlier.
As was pointed out during that campaign, Kerby and Sorensen noted the county has the fourth lowest property tax rate (8.5 mills) among counties around the state. The median is 20.021 mills for the state's small and medium size counties, they said.
The county has been setting aside some property tax revenue from oil and gas to be used for capital improvements or facility purchases. "At the end of 2015, this amount was approximately $20.5 million and is reserved in the General Fund as assigned for capital projects," Kerby and Sorensen said.
Staffing is the county's biggest expense at 41.57 percent of total spending. The staff turnover rate has increased over the last several years, and "It is becoming more difficult to retain employees based on our salary and benefits packages," they said. No new positions were approved for 2017, and vacancies are reviewed to see if the position is still needed. The budget does include merit pay increases tied to an employee's performance evaluation.
Road projects listed for 2017 include gravel surfacing on County Road 527 for $23,790; $2.15 million for urban and access improvements on CR 517, with cooperative funding from the Southern Ute Indian Tribe, State Department of Local Affairs, and CDOT. It also shows improvements on CR 318, a $1.4 million project. The county will contribute $700,000 for that. The county will use fees collected from the energy industry as part of infill drilling agreements to design two county bridge replacements near Ignacio.
The budget also shows $1.4 million for mill and overlay on CR 302; improvements on CR 120 to handle heavy truck traffic, $2.5 million to be paid by GCC, the owner and operator of the King II Coal Mine. The Road & Bridge budget also shows $750,000 to remodel the Road & Bridge office to house the County Engineering Department, currently in the Old Main Post Office in downtown Durango that the county wants to vacate and possibly sell.
The big capital project has been renovation of the courthouse to add a district courtroom and house federal court facilities, also to move the district attorney's Office back from the Old Main Post Office. The work is supposed to be finished this year. It's being paid for with some of the money the county has set aside in previous years from gas industry property taxes and DOLA grant funding. The feds will make lease payments to the county for their part.
Kerby and Sorensen said, "The completion of this project is a major achievement in the county's long-term strategy of having a federal court presence in downtown Durango" to provide better access to the federal court system, including for local tribal members.
Public safety makes up 35 percent of the general operating budget this year at $27.58 million. That includes the sheriff's office - jail, patrol, investigations, and emergency management; also the district attorney's office, coroner, building inspections, and contributions to the towns and non-profit groups that provide public safety services.
Public works, including the Road & Bridge Department, accounts for 24 percent of the operations budget at $18.57 million. General government, the administrative offices and the offices of elected officials, also is 24 percent at $18.29 million.
Health and welfare is 13 percent at $9.9 million. This is the Department of Human Services, which includes child welfare, adult protection, senior services, and veteran services.
Recreation and culture is 4 percent at just over $3 million. This includes the fairgrounds and the county fair. The budget includes $270,000 from the Conservation Trust fund (state lottery money) for a multi-event center master plan. The county advertised in early December for consultant proposals to do that study centered on Ewing Mesa, as reported in the Dec. 9 Times. Bids were due on Jan. 16.