by Tracy Chamberlin

It might seem like the housing market is hopping, both nationally and locally. But that trend’s not going to help the county balance its budget.
With property values assessed at a low point and natural gas prices falling, communities dependent on taxing these entities for revenue are looking at a tough couple of years.

“It will be a challenging two years,” La Plata County Manager Joe Kerby said in an interview last week. “But I certainly think we’re up to the task.”
The timing just wasn’t on their side.

Every two years, the County Assessor’s office determines the value of real property based on an average market value. For this year’s assessments, the average was based on the time period from July 1, 2010 - June 30, 2012.

Market values were at a low point during this stretch. “Last summer … I hope was our trough,” said County Assessor Craig Larson.
The market didn’t start to pick up steam until the start of 2013. So even though things are looking up this summer, the assessed values will remain low until they are recalculated, which won’t happen for another two years.

And it’s not just real estate. Oil and gas took a dive, too. Natural resources are another part of the overall assessment equation and, due to declining natural gas prices, the county took another hit.

According to Larson, the one sector that saw an increase in value this year was agriculture.

Several factors combined to nudge those values up. For one, La Plata County produces high-quality alfalfa, which is selling for more. Also, out of all the counties in the drought-stricken southwest, La Plata is faring better with precipitation than many others. Finally, agricultural values are based on a 10-year average instead of a 2-year average.

But the uptick in agriculture isn’t nearly enough to offset the drop in real estate and natural gas.

For the county, which gets almost one-third of its revenue from property taxes, Kerby said it translates into an estimated $3.2 million loss next year.
“I warned (the county commissioners) about this,” Larson said.

The commissioners will get more involved with the process this October, after final numbers are in and they begin tackling the budget for 2014.
Property owners are entitled to a protest period. If they don’t agree with the assessed value, they can protest that it be reviewed and either increased or decreased. Larson said that typically, property owners think the value is too high and should be lower. This year, however, owners are saying the values are too low.

Of course, one way to raise the money agencies and municipalities need for budget operations is to ask voters to raise the mill levy, or property tax. The state’s Taxpayer Bill of Rights (TABOR) leaves the power to increase taxes in the hands of the people. The next chance for this to happen would be November.

“That’s not something we’re considering this year,” Kerby said.

The Upper Pine River Fire District in Bayfield, however, is considering it. Mired in budget problems even ahead of the recent assessments, the district is looking to take a mill levy increase to the voters this fall.

La Plata County is trying something else.

First, all department heads are being asked to keep their budgets, at the very least, at the same level they are this year. No increases, no add-ons, just status quo. Second, the county will be looking to grants for some additional revenue.

Third, Kerby said the county is looking for ways to increase efficiency through technology. For example, the amount of time and resources allocated to process building permits depends entirely on the economy and demand. When the demand is high, more resources are required. When demand is low, those resources are stagnant.

Technology could help the county save money by helping process the extra workload during high times. Kerby said this approach would help during lean years, as well as into the future.

La Plata County’s not the only one feeling the crunch. This assessment affects every agency, fire district and municipality that takes in property tax revenues as a part of its operating budget.

From the City of Durango to the Town to Bayfield, each one is going to take the hit. Some bigger than others.

Durango will take a much smaller hit because the bulk of the city’s revenue comes from sales taxes. In 2012, Durango took in about $1.2 million in property taxes and $12.7 million in sales taxes, a number that’s been climbing since 2010.

According to the city’s latest financial reports, sales tax revenues were up 11 percent for the month of May over 2012, and up 6.3 percent this year over last.

It’s the kind of trend Kerby hopes could also help the county. La Plata County gets 21 percent of its revenues from sales taxes. “If it continues … it will help take the edge off,” he added.

The final numbers won’t come out until Aug. 25, when the protest periods are complete and the state has assessed the value of utilities. Until then, local governments and agencies won’t know just how low the budget might have to go.