Revenue hit by declines in price, production
The decline in coal mine production and the sagging price of natural gas are delivering a one-two punch to the finances of the Recreation/Transportation Special Service District. The district board has imposed a spending freeze in response to uncertainty. It will not contribute to any new projects.
The district is funded by a share of federal royalties from fossil fuel extraction on federal lands, as well as state money tied to energy production that is owed to the county. A decrease in either production or price – or both – causes a reduction in those royalties.
“It looks like to me we are going to have a shortage of money if this keeps up,” said district board member Jerry Jensen at the Oct. 5 meeting.
Never in all the years since the district was established in the late 1980s has anyone seen a time that the district was in the position it is today. Even when coal production dipped over the years, gas revenues have helped to bolster the checkbook. The difference today is that while coal production in the county is down, gas that is being produced from wells in Carbon is not selling for near what it did, and there is not as much of it being exported.
The latest figures that are available show the district has had revenues of only $2,517,663.87 this year through August. The budget for the year is $5,625,000. This leaves a shortage of $3,107,336.33 or 44.8 percent of what was predicted for 2015.
Total cash assets in savings and checking at the end of September were $567,236.76.
Steady decline
For the most part payments have declined over the last four years, with one exception in 2013. In 2011 the district got $7,893,648.16 in payments. By last year, that had dropped to $5,274,938.09. But this year, even if the district received the same money in the last four months of this year as it did last year, it would still be more than $1 million below projections.
Luckily, in some areas expenditures have been down this year, but just the same the district has about $1 million in obligations to Carbon County to pay by the end of the fiscal year. In addition the district still has three months of funds coming, with special sequestration funds coming in October. Last year that month’s payment to the district was $759,920.76. No one knows what that number will look like this year.
With what the district has in reserves, payments and expenditures will be covered this year. However, what happens to further revenues as next year progresses is anyone’s guess. “It is a crap shoot as to where revenues will go,” said board member Mike Milovich.
After reviewing the monetary returns for the year, the future of coal operations in the county was discussed by the board. It was brought up that Skyline Mine, now the biggest coal producer in Carbon, will soon be crossing its mining operation over into Sanpete County, where the production will then produce dollars for that county. Carbon will still get a portal fee, and some mining will still take place on the Carbon side in 2016, but by 2017 all mining will be on the other side of the county border.
Dugout Mine is still producing coal, but it does not have a long wall operation so it is not producing at the amounts that will change the numbers on royalties very much. Board members said that Westridge is just about played out, so no money will come from there.
Gas production in the future was not discussed at the meeting. The writing seemed on the wall to the board and its members.
“If we are to incur any more expense, then we will have to have more dollars,” said Milovich.
Initially the district was just set up as a transportation district, recreation was eventually added to its title and responsibility. For years the district has provided money to the county and some other entities for projects that range across the board, from baseball and soccer fields and the golf course to the Senior Center and road improvements.