Financial forecast brightens for Eagle County
August 2, 2013
Eagle County will not take as big of a hit in property tax revenues as had been anticipated in June 2012, when the last assessment was done.
That was the biggest news when County Assessor Mark Chapin, Finance Director John Lewis and Controller Tom Hyatt presented the latest numbers to commissioners on Tuesday.
However, other revenues that are decreasing or not growing as fast, if at all, are offsetting the fiscal improvements to a degree.
"Our fund balance continues to grow to the extent that we forecast an 83 percent reserve by 2018," Lewis said. "We have money. The general fund is healthy, so in case we have a forest fire or some catastrophe, we have extra funds – and this does not include the $2.5 million reserve that's set aside as required by TABOR."
“We have money. The general fund is healthy, so in case we have a forest fire or some catastrophe, we have extra funds – and this does not include the $2.5 million reserve that’s set aside as required by TABOR.”
Eagle County Finance Director
The TABOR fund is solely for emergencies. If it is used it must be reimbursed within six months.
Hyatt said the county made cuts in 2012 and 2013 in anticipation of a break-even budget in 2014 due to a 20 percent drop in property taxes. Now the county expects to see only an 8 percent drop in property tax revenues, which leaves $873,113 leftover in the 2014 projections.
"This is a very preliminary estimate, though," Hyatt cautioned. "Interest rates are way down, which means our interest revenue is down. Our balances are way up in cash but the return is very little, so it kind of offsets the property tax."
Chapin said the difference in the projected property tax revenue for the county has to do with the difference between the median property value in the county and the average value, which is higher.
"The market change in the median property values was down 23 percent from the last valuation but the change in the average property value in the county overall is only 8 percent," he said. "We generally use median values to determine what the market is doing, but since the high-end properties in the east end of the county (Vail) did not fluctuate as much while the values in the west end dropped significantly, it skews the average."
The new forecast for the county's general fund property tax revenue is $12.2 million for 2014. For comparison, this year is projected to finish at $13.212 million and 2012 finished with $13.217 million. About $17.3 million was collected in 2011.
"We are starting to see things go back up," Chapin said. "Properties below $500,000 are seeing the biggest increase (because the upper end of the market was more stable in the first place)"
That's good news for a county that that receives 44 percent of its funding from property tax revenues.
Meanwhile, sales tax revenue is still going up but the rate of increase is tapering down for the county.
"Sales tax is a good story but the growth rate has slowed down," Hyatt said.
In 2009, sales tax decreased 20 percent and decreased again in 2011 by 6.6 percent. Then it increased by just over 6 percent in 2011 and then 4.8 percent in 2012.
"So far, we are up 3.7 percent over last year at this time," Hyatt said. "Right now we're seeing a perfect seesaw – one month is up from the same month last year, then the next one is down – the whole year has been that way."
Hyatt said the county is now forecasting 2 percent growth in sales tax through 2018 in order to budget conservatively.
He pointed out that revenue from the 1 percent sales tax the county gets from all the towns is up across the board except in unincorporated Eagle County.
Beaver Creek seems to be doing well, which leaves Edwards – which has the highest population in the county – as the possible weak link. Whatever the reason, sales tax is down .26 percent for unincorporated Eagle County.
Commissioners discussed the possibility that no new revenue is coming into Edwards – that businesses are simply dividing the money that is already there instead of bringing in additional revenue. If that's the case, commissioners will have to consider the potential impacts of approving future developments there that might only steal business away from existing businesses.
Lewis said some of the main factors weighing down county revenues include a flat overall growth rate, people spending less in the down economy, sales tax being lost to Internet purchases and the county's lack of a use tax.
"The use tax is a big one," Hyatt said. "We've considered it and it would have to be approved by our citizens."