For years, La Plata County commissioners have wrestled with the question of how to fund the county’s Road and Bridge Department.
The Board of County Commissioners faced that fiscal reality once again last week during weekly board discussion time, when the Long Term Finance Committee presented its findings: Without a sustainable, long-term infusion of revenue, the Road and Bridge Fund’s reserve balance will be gone by 2025.
Over the next 20 years, the department estimates it will need $203 million to address capital improvements on the 653 miles of county-maintained roads.
The county’s property tax rate of 8.5 mills – a tax of $8.50 for every $1,000 of assessed value – is the fourth-lowest in the state. For years, it was revenue from oil and gas that buoyed the county budget despite the low tax rate. But a 77% drop in the value of oil and gas production precipitated a 46% decline in overall property tax revenue over the last 14 years.
And of that 8.5 mill levy, just 0.71 mills is directed to the Road and Bridge Fund. The committee members determined it would take an addition 3 mills to fund even the bare minimum $60 million capital improvement plan.
State law restricts the county from supplementing the department from the general fund, although for three years commissioners have used a statutory workaround to direct $5 million of sales tax revenue to the road and bridge fund before it enters the general fund.
However, this practice is unsustainable given that general fund reserves are expected to drop 54% this year, the committee informed the BOCC.
Even a 3-mill increase won’t leave the department rolling in cash. It would generate about $2.1 million per year in additional tax revenue, and the committee assumed that new impact fees, paid by developers of projects that introduce more drivers to roads, would generate an additional $569,000 annually.
Committee member Rich Butler told commissioners that the $60 million “drastically scaled-back capital project plan” was “just a Band-Aid.”
The big problem now? Convincing the voters.
“There’s no choice, we have to have more revenue,” Commissioner Marsha Porter-Norton said during the discussion.
A 3-mill increase would place La Plata County with the seventh-lowest property tax rate in the state, and still behind neighboring Montezuma, Archuleta, San Juan, Montrose and Dolores counties. It would cost the owner of a $500,000 an additional $100 per year.
Residents of rural parts of the county have decried the poor condition of the roads.
“It is absolutely impassable,” one resident of County Road 301 told The Durango Herald last year.
But in both 2015 and 2016, La Plata County voters rejected ballot questions asking to increase the mill levy, which has never been raised by voters and has remained unchanged for over 40 years.
Part of the problem relates to messaging and the complex nature of how property taxes are calculated. Last year, county residents called foul over the spike in assessed home values. But assessed values, dictated by market rates, are just one part of the equation.
The assessment ratio – the fraction of a property’s actual value that the owner must pay taxes on – is set at a state level. And mill levies vary greatly, depending on what sorts of special districts a property sits within.
Fire districts, school districts, metro districts and all other special taxing entities collect property taxes. The median mill levy in the county is 46.242 mills, of which just 8.5 mills goes to the county.
In a slide presented last week, the committee shared that actual property values increased 3% in the county from 2010 (taking into account falling oil and gas value, which is taxed based on production), but the assessed value of property across the county fell by 46% because of the repeal of the Gallagher amendment and other statewide action.
So while the standard homeowner may feel that property taxes have climbed, the county has seen a stark drop in revenue as a result of declining oil and gas production.
Mineral extraction has moved increasingly to the Permian Basin as the natural gas within the San Juan Basin is increasingly difficult to access, committee members said.
Commissioners are not pushing a ballot question yet. Instead, they appear poised to engage the public on the matter going forward, beginning during a series of On The Road events beginning later this month.
Without raising panic, commissioners are trying to suss out how to present the idea of a tax increase in a palatable way so that the department can adequately maintain roads.
“I don’t want to sell ourselves short,” Board Chairman Matt Salka said.
rschafir@durangoherald.com
