With oil and gas down, governments getting fewer property taxes

Posted

Homeowners likely to see slightly bigger bills

Tougher times in the oil and gas industry last year will mean fewer property tax dollars for Park County’s schools, fire departments and other governmental entities this year.

Over the fiscal year that began July 1, local governments expect to collect $43.4 million in property taxes.

The Park County Treasurer’s Office plans to send out tens of thousands of tax bills to property owners in the coming weeks.

The total amount of property taxes is down by roughly $2 million and about 4.6 percent from the $45.5 million billed out in 2016. It’s also down roughly 30 percent from the $62 million worth of property taxes assessed in 2015.

However, Park County Assessor Pat Meyer believes the oil and gas industry and, in turn, the county’s tax base, is on an upward trend — meaning more tax dollars for local governments next year.

“I still think we’re going to be on the upswing, but it’s going to be a lot more gradual than I first anticipated,” Meyer said recently, adding, “We’re going to get more [production] and it’s going to come back.”

It’s unclear how long that might take. Data from the Wyoming Oil and Gas Conservation Commission says that, from January through June, oil and gas production in Park County actually appears to have slipped a bit further — falling between 1 and 2 percent from the same period in 2016.

However, prices for the minerals have improved; higher gas prices are also expected as a side effect of hurricanes in the southern part of the U.S.

Meyer suspects last year will prove to have been the bottom of the decline and “it wasn’t that bad” for governments like the county.

“We’ve lived off way less than that [amount of taxes] before,” he said.

While the industry will pay fewer taxes this year, most local homeowners will actually pay more, because residential properties are continuing to increase in value. The median sales price of a residential home in Park County rose to $231,250 last year — up 1.2 percent from the year before; an increase in value generally means a corresponding increase in taxes.

Wyoming’s K-12 schools collect the bulk of property taxes. Of the $43.4 million in property taxes in Park County, about $26 million, or roughly 60 percent, will go to schools. Another $7.26 million (16.7 percent of the total) will go to the Park County government.

The remaining 23.4 percent or $10.1 million is split between a variety of other government entities. In Powell, those taxing entities include Northwest College, the city, the Powell fire district, the Powell hospital district, Crown Hill Cemetery, Park County Weed and Pest, the Powell Recreation District and Powell Valley Community Education.

Property taxes are assessed through what’s called a mill levy. Each mill represents a 0.1 percent tax on a property’s assessed (taxable) value. Each entity is limited in how many mills it can collect. For example, the county commission can levy no more than 12 mills on taxpayers.

In Powell city limits, property owners are being assessed a total of 76.252 mills this year. For someone who owns a $170,000 house (the median sales price in Powell last year), that will mean a tax bill of about $1,231.

The property tax rate for Powell area residents is slightly higher this year, because Crown Hill Cemetery District leaders raised its levy from 1.002 to 2.86 mills. On a $170,000 house, that will mean paying an extra $29.72.

The district — which is allowed to levy as many as 3 mills — plans to use the money to develop four new blocks at the cemetery, located east of town. That includes dirt work, water lines, roads, sod, markers and other items, the district says.

“Most areas [of the budget] have remained the same, or have been cut in this budget to allow for the construction of these blocks and still stay within the 3 mill limit,” district officials wrote in their budget.

Powell Valley Community Education also considered slightly raising its mill levy, but ultimately did not (see related story below).

Properties are assessed at different rates: homes, businesses and lands are taxed on 9.5 percent of their market value, industrial properties are assessed on 11.5 percent of their value and minerals like oil and gas are levied on 100 percent of their value.

When all of those figures are added up, Park County’s assessed valuation for 2016 stood at just less than $605 million. That was down about $35 million from the year before.

The valuation dipped because the oil and gas industry continued to slow down last year.

Companies pumped out 9.75 million mcf of natural gas — up about 4.6 percent from 2015 — but that wasn’t enough to offset a decline in oil production. The formations beneath Park County yielded not quite 6.09 million barrels of oil last year, a 7.6 percent drop from 2015.

The other, bigger problem was that prices for those minerals stayed low. Park County’s oil fetched a price of around $29.69 a barrel, according to Meyer’s calculations, down from nearly $34 a barrel in 2015.

The total value of the oil and gas taken from beneath Park County lands came to less than $187.5 million — the lowest amount since 2003.

Meyer says Park County’s fortunes can generally be tracked with the price of gasoline at the pump.

“When it hits $3 a gallon, we’ll be doing much better,” Meyer said earlier this summer, adding that, “I don’t mind paying the extra money for the gas because that usually means good things are happening.”

(On the flip side, he noted that higher gasoline prices can also mean fewer travelers, hurting the county’s tourism.)

Because of the slowdown in the oil and gas industries, Park County governments have, by necessity, become somewhat less reliant on mineral production.

In 2009, oil and natural gas made up two-thirds of the county’s property tax base. Now, that ratio has flipped: mineral production represents less than one-third of the county’s assessed value while homes, businesses and equipment represent two-thirds.

Park County commissioners are required to approve the entire mill levy, which they did on Aug. 1.

Powell taxpayers will not be asked to contribute more money for community education this year.

After some confusion, the Powell school board recently decided that local property owners will be assessed 3/8 mill — amounting to $69,762 in taxes — to fund Powell Valley Community Education (PVCE). When presented to the school board, PVCE’s budget for the new fiscal year had proposed a 1/2 mill levy — estimated to bring in $93,016 in revenue.

“I’m kind of perplexed here, because I’ve been to all the meetings and I don’t remember that we were going to raise the mill back up,” said Don Hansen, who serves on the Powell school board. He also serves on the Board of Cooperative Educational Services (BOCES), which oversees Powell Valley Community Education.

A few years ago, the school board lowered the mill to 3/8 in an effort to reduce the amount of money in PVCE’s reserve accounts.

Hansen noted there is still roughly $250,000 in reserves, and he recalled that PVCE was going to use money from those accounts before asking taxpayers to raise the mill back to 1/2.

Greg Borcher, school board chairman, and Trace Paul, vice chairman, both served on the BOCES board in the past and agreed.

“We were going to spend down the reserves before we raised that mill back up,” Borcher said.

The difference between 3/8 mill and 1/2 mill is $23,254, said Mary Jo Lewis, coordinator of business services for the Powell school district.

“The board has the choice to not assess the half-mill — you have the choice to only assess back to the 3/8,” Lewis said. “That is your choice.”

Ultimately, that’s what the school board decided to do for the 2017-18 fiscal year.

PVCE’s total budget for the year is $131,016. The 3/8 mill will generate an estimated roughly $69,762.

PVCE will transfer $42,091 out of reserves toward its budget for the coming year, said Anna Sapp, Northwest College Training and Development program coordinator. Northwest College oversees the day-to-day operations and programming for Powell Valley Community Education.

Some of the money from reserves — $22,000 — is going toward the educational resources Lynda.com and Plato, which provide new learning oppportunities for the community, Sapp said.

“In the end, the bottom line stays the same for us at $131,016, which allows us adequate money to do what we need to do, and to add the amenity of Lynda.com and Plato,” Sapp said.

A joint board of representatives from the Powell school district and Northwest College serve on BOCES.

“The previous PVCE board had discussed and decided that until the reserves were spent down, it would stay at 3/8 of a mill,” Sapp said. “This is a slightly different board configuration; it’s a slightly different group of people.”

She expected there will be discussion about returning to 1/2 mill in the future.

“We’re getting down on those reserves to the point that it’s not prudent to keep going further down on the reserves,” Sapp said.

— Tessa Baker

Comments