Gas and oil tax revenue in La Plata County will likely fall in 2017 as a result of current declining production and low prices.
County Assessor Craig Larson warned La Plata County Commissioners on Wednesday that low market prices could hurt the budget two years from now.
He estimated revenue from natural gas could drop from about 41 percent of property-tax revenue for the county in 2015 to about 30 percent by 2017.
So far this year, average prices for natural gas have been lower than the annual average going back to 2006. But the average price could recover if demand for gas rises before winter, Larson said.
Greater production also could offset the drop in tax revenue, after declining about 7 percent between 2013 and 2014, but that scenario also seems unlikely, Larson said.
“We anticipated some drilling that would have slowed down depletion,” he said.
But only one rig has started work, he said.
Revenue from natural gas has been steadily dropping from $17.6 million in 2010 to $5.06 million in 2014.
To help pay for road and bridge maintenance and facility improvements, the commissioners may ask the voters to increase taxes soon.
The county currently has the fourth-lowest property tax rates in the state.
Even before the fall in natural-gas prices, the county projected it would face $6 million in road and bridge needs that it could not afford, according to La Plata County Long Term Finance Committee documents.
“What we’re trying to do is create sustainability,” said Assistant County Manager Joanne Spina.
The board has contracted with CRL Associates to conduct a survey on the potential increase, she said.
The survey will start Monday, and it is expected to run through Wednesday or Thursday. The survey aims to reach 480 people.
The survey may present a range of property-tax increases, but it has not been finalized, she said.
The LTFC developed six options for raising taxes that would raise $98 million in 10 years. This included $56 million in building costs.
But in February, the commissioners re-evaluated building needs, and they are still developing a long-term plan for facilities, Spina said.
mshinn@durangoherald.com
