Carbon County’s fossil fuel-based economy is stumbling, having now reached a point where county government is pondering how to cope with a multimillion-dollar shortfall in revenue. It means that the county will have to revise its budget for next year and probably make another round of deep cuts in public services. It’s either that, or raise taxes, or both.
“We had to cut $2.5 million a year ago,” Commissioner Jake Mellor told the Sun Advocate last week. “We cut the fat out, then we had to cut muscle and now we’re into the bone.” The shortfall could be as much as $4 million for 2015 and 2016 – and that’s on an anticipated budget of about $12.5 million.
At the heart of the problem is the reliance on taxes and royalties from fossil fuel extracting industries – coal, natural gas and petroleum – for some operating expenses. As reported in the Sun Advocate earlier, coal production has been declining and natural gas prices remain low because of a market glut. In both cases, mineral lease royalties sagged.
According to Mellor’s figures, mineral royalties paid directly to the county went from $3.8 million in 2011 to $1.6 million in 2014.
“The county was able to hold taxes artificially low for 30 years,” Mellor said, explaining that mineral lease payments directly to the county and through the Recreation/Transportation Special Service District paid for some items such as police cars and recreation activities. Neighboring counties Duchesne, Uintah and Emery charge higher property tax levies than Carbon, according to recent statistics.
The special service district recently put a cap on new spending, effectively drying up some of the anticipated revenue stream, the commissioner noted. The county used to get about $3.5 million annually from the district, but can expect only $1.3 million next year.
Another factor that has hurt revenue is the general decline in property tax revenue from the major energy producers. When companies own property in multiple counties, the Utah Tax Commission handles the assessments. These are called centrally assessed properties. For several years, the valuations of many of these properties have been going down.
The difference has to be made up by smaller businesses and residential taxpayers.
Mellor said the county has to prepare and submit its budgets before any hard data on state and federal revenue come in. Estimates made earlier now have to be revised downward.
The commissioner explained the situation to the boards of the Chamber of Commerce and the Business Expansion and Retention group. In addition to explaining the cause of the fiscal situation, he said the commission is asking for reasonable suggestions as to what steps to take to balance the books.
It is also asking department heads again to look for ways to cut expenditures.
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