Property tax revenues projected to plummet
EAGLE, Colorado – Eagle County’s spending plan for 2012 has some good news and bad news.
First the good news: Sales tax collections for 2011 are 7 percent higher than anticipated, and county finance officials believe that when the year ends, sales tax receipts will be up 6 percent from last year. That’s good news considering sales tax numbers in 2010 were down 6.1 percent from 2009 and those 2009 figures plummeted by 26 percent compared to the previous year.
Through September of this year, the county has collected $8.5 million, and that figure is up by $425,000 over the same period last year.
In planning for the 2012 budget, the county is anticipating flat sales tax revenues next year.
That’s the good news. Property tax figures and estimates are the bad news.
As any Eagle County homeowner can testify, property values have significantly dropped over the past four years. The average price of a single family home in Eagle County is down 17 to 18 percent since 2010 and the average value of vacant land is down as much as 60 percent in the same period. The next reappraisal hits in 2012 and that will have a big impact on property tax receipts for local governments, including Eagle County.
Beginning in 2012, the latest round of property devaluation will hit, and property tax receipts are expected to decrease by 26 percent from the 2011 level. That trend is expected to continue through 2014, which would see an additional 20 percent drop from 2012 figure. The cumulative impact could be a 40 percent reduction in property tax revenues from 2009 to 2014.
For the county’s general fund – the operations money including salaries and benefits – property tax revenues are forecast to drop from $17.3 million in 2011 to $12.8 million in 2012. Obviously, that meant the county had to find ways to cut back spending.
Eagle County Finance Director John Lewis said the specter of the current property tax revenue slide began to manifest back in 2009.
“When Tom (Hyatt, Eagle County controller) first announced we might be headed for trouble back in the spring of 2009, everyone said we were being too pessimistic,” said Lewis.
The county opted to form its Finance Advisory Board, a volunteer group of local financial experts, to look over the long-term financial estimates and weigh in on the process and conclusions.
“They didn’t think we were being conservative enough,” said Lewis.
As a result, the county began preparing for next year’s tight budget back in 2009 when it instituted a “soft” hiring freeze. That meant whenever someone left his or her job, the county re-evaluated whether a new employee was needed or whether the job responsibilities could be absorbed by other workers.
After that, the county’s finance department undertook a study of all departments’ staffing to see if cuts were needed, and an early retirement program was offered for many county workers.
“Then we looked really hard at all the positions again,” said Lewis.
At the end of all the efforts, the county had trimmed its work force from about 507 full-time equivalents to about 430.
“Every department had at least one cut,” said Hyatt.
For this year’s budget, the county included a 4 percent merit raise pool after freezing wages for three years. In 2012, the budget does not include merit raises, and the soft hiring freeze is on again.
“We are in good shape for 2012 and 2013. Where we start to get concerned is 2014,” said Hyatt. “A 40 percent property tax drop hits us pretty hard.”
He noted the focus in developing the 2012 budget has been sustainability – can the spending proposed continue over time?
In the realm of capital spending, any large construction projects the county undertakes next year will be highly dependent on securing federal or state grants. One example is the Catamount Bridge on the Colorado River Road. The county successfully obtained federal grant money for the bridge replacement. Likewise, federal dollars will fund new buses for Eagle County Transit.