The oil and gas industry can rake in cash for Weld County, but that money can disappear quickly.
Although 2016 budget planners are enjoying the spoils right now, it looks like the drop in oil and gas activity will take $60 million out of the county’s budget in 2017, said Finance and Administration Director Don Warden.
A third of the county’s revenue comes from property tax, which annually charges a percentage of a property’s assessed value, a figure assigned by the assessor’s office.
There’s a two-year lag between appraisals and collections, so the industry’s activity this year will affect 2017’s budget.
The industry is responsible for a majority of the county’s property tax base. Officials project more than 65 percent of 2015’s assessed property value will come from oil and gas — a number that has been on the rise for years. But when oil prices dropped, production was slashed. That’s made property associated with the industry worth less.
For the 2016 budget, Weld County’s assessed value is $11.2 billion, Warden said. That’s about $2 billion more than it was for the 2015 budget. For 2017, the assessed value is expected to drop to $8.3 billion.
Still, core services won’t be affected, Warden said.
He’s worked for Weld for almost 40 years. When it comes to the energy sector, this isn’t his first rodeo.
“It’s about the third boom or bust I’ve seen in the county,” he said.
He wrote a paper working on a financial strategic plan for the county about six years ago, when the assessed value was at less than $6 billion. He and the other planners saw another boom on the horizon, and they approached it with cautious optimism.
“We basically foresaw these good times aren’t going to last forever,” he said.
Instead of giving more money to permanent expenditures — what Warden calls core services or core government — planners have been allotting more to short-term expenditures, including capital improvements and infrastructure projects.
Somewhere between $125 million and $150 million of the county’s ephemeral revenue will go to the Weld County Road 49 project. Weld 49 serves as a back way to Denver that transformed in recent years from a rural farm road into a widely used byway, thanks to the energy industry. Planners hope gussying it up will ease traffic on U.S. 85.
About $35 million went into a contingency fund to insulate the county during the inevitable bust.
Millions have gone into other improvement projects, such as the emergency dispatch center and IT upgrades.
Then there are the day-to-day funds, which have stayed about the same, Warden said.
“Core government since 2009 really hasn’t grown,” he said. “You don’t want to expand the government to the point you can’t afford it any longer.”
But staying the same can pose problems for municipalities within the county.
Weld’s towns are seeing $5 million less than expected go into a road and bridge maintenance fund. A portion of property taxes go back to Weld’s 31 cities and towns for road and bridge support.
Earlier this year, Warden and municipal finance directors thought 2016’s road and bridge payout would get to increase by $5 million — from $16.5 million to $21.5 million — because of the growth in assessed value. Many cities, including Greeley, planned accordingly.
But in September, the county commissioners decided that although the increase seems sensible, it wouldn’t be sustainable.
“If oil would have stayed at $100 a barrel, we probably would have made that decision (to increase the fund),” Warden said. “We know we’ll have to turn around and cut those the next year.”
Many factors play into how much a city gets from the fund, from how much of the assessed property value came from that city to taxing districts.
Earlier this year, Greeley finance planners were figuring the percentage the city would get would be the same, so the money it got would increase. But the county commissioners lowered the percentage to keep the contribution about the same.
Greeley anticipated a little more than $808,000, said Assistant City Manager Victoria Runkle, who serves as the finance director. The city’s really getting about $715,000.
That money goes into a road operations fund, said Public Works Director Joel Hemesath. This takes care of smaller projects, such as filling in potholes and mowing grass.
City planners didn’t include all $808,000 in the budget, so instead of being short the full $92,000, the budget is losing only $84,000.
The county’s 2016 budget hasn’t been finalized, and Greeley won’t know whether a new road tax measure will go through until Nov. 3.
This article was written by Catherine Sweeney from Greeley Tribune, Colo. and was legally licensed through the NewsCred publisher network.