Eagle County property tax revenues may fall again
EAGLE COUNTY, Colorado – The local real estate market, once such an integral part of the valley’s economy, may not be through dropping.As part of the job of building the 2012 budget, the Eagle County Commissioners recently heard a presentation from a volunteer financial advisory board, a group of local residents who have helped county officials understand private-sector trends and how they will affect the county’s tax revenue.There’s some good news – primarily that the county’s sales tax collections are making a slow recovery from the steep drop that came in 2009, when the county and its towns all recorded sales tax declines of 20 percent or more.County finance director John Lewis is projecting about a 6 percent gain in sales tax collections this year, and is expecting another 6 percent improvement in 2012. But local government budgets will take a significant hit in 2012 thanks to a hard fall in property values and property tax revenues.State law requires counties to re-value property every two years. This year’s values are based on a “snapshot” of sales activity from June 30 of 2010. Those numbers, on average, are down 26 percent from the last “snapshot” in 2008. Some communities fared better than others. Property in Vail and Beaver Creek didn’t lose as much value as downvalley communities did in the last round of valuation. But local government budgets have taken hits ranging from moderate to hard – the Eagle County School District and local fire, ambulance and recreation districts, all of which depend mostly or entirely on property taxes have been hardest hit.While finance directors at those districts have been planning lower budgets for 2012 and 2013, the next valuation cycle may have more bad news.Mike Budd, a local Realtor and a member of the financial advisory board, told the commissioners that the local real estate market may not be done dropping, for reasons both local and national.Locally, there’s a lot of inventory still on the market. At the meeting, Eagle County Assessor Mark Chapin said that the ratio of property sold to property for sale has dropped by about half over the last few years. Just a few years ago, about 90 percent of all listed property was sold. These days, about half of listed property ends up at the closing table.That’s due to several factors, including local job loss, a drop in the average wage in the county – which is now lower than the state average – and the difficulty of obtaining mortgage financing. And, as the economic slump lingers, property valued at $500,000 and up is starting to take more space in the weekly foreclosure notices.The banking situation is poised to get worse, Budd said. The limit for FHA-backed mortgages is set to drop from the current $729,000 to the low $600,000 range. That means mortgages for some vacation properties will come with higher interest rates, if financing can be found.Then there’s the continuing push to raise taxes on people who earn relatively high incomes. Part of that push, if it comes to pass, might include modifying or eliminating the mortgage interest deduction for second and third homes. If that happens, the second-home market is going to take a serious hit, Budd said. It’s obviously too soon to tell what’s going to happen in the next round of county property appraisals, but Budd said he wouldn’t be surprised if property loses between 10 and 20 percent of its current value.But crystal-ball gazing is imperfect on its best days.”There are so many things that could change in the next couple of years,” Lewis said. “We just need to keep our fingers crossed that 2014 will be better.”Business Editor Scott N. Miller can be reached at 970-748-2930 or email@example.com.