Property value collapse about to hit governments
July 11, 2011
BASALT – Special taxing districts in the midvalley are starting to learn how hard the collapse of property values will hit them in their pocketbooks.
The districts – from the Basalt town government to the fire department – are losing ten of millions of dollars in assessed value, which means they will collect less property tax revenue in 2012.
The town of Basalt’s assessed value for property in Eagle County fell from $154.28 million last year to $97.97 million this year. That’s a drop of $56.31 million or 36.5 percent. (Assessed values is the taxable amount. It’s different from the market value.)
Crown Mountain Park and Recreation District saw its assessed value plummet $102.1 million, from $288.85 million last year to $186.79 million this year. That represents a fall of 35 percent.
The Basalt Regional Library District has the same boundaries, and thus the same assessed value, as the Basalt and Rural Fire Protection District. Both saw their assessed value fall from $291.44 million last year to $188.98 million this year: That’s a decline of $102.46 million, or 35 percent.
Each of the districts is partly in Pitkin County, so their full assessed value will be higher.
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Eagle County itself – which includes El Jebel, along with portions of Basalt, Missouri Heights and the Fryingpan Valley – saw its assessed value fall from $3.62 billion to $2.81 billion.
In many cases, property taxes collected for operations will fall at the same percentage as the drop in assessed values, Eagle County assessor Mark Chapin said.
“The only avenue for them to capture revenues lost is to go to the voters,” he said.
Sometimes property taxes pay off bonds issued for special projects, such as construction of the Basalt library. In those cases, the property tax can be raised to offset the loss of assessed value. Voters granted permission for the adjustment when they approved the bonds.
Chapin said his office met last month with representatives of the special taxing districts and gave them estimates of their assessed values. The amounts aren’t fully set yet because the office is processing appeals from individual property owners. Settling those cases will require adjustments.
It was clear as early as 2009 that government entities eventually would feel the pinch of the recession from lower property-tax revenues. However, because the government valuation process lags behind market conditions, it will take until 2012 for property taxes to fall.
“Everybody’s tightening their belts,” Chapin said.
Bob Guion, a member of the Basalt and Rural Fire Protection District’s board of directors, said the board and staff have taken a conservative approach with budgets. They have built up reserves and resisted adding a lot of increases in fixed costs. “That’s kept us on very solid financial ground,” he said.
As conditions stand now, the district can absorb the loss in revenue from property taxes without laying staff off, requiring furloughs or reducing services, Guion said: “We feel we’re good for four years, maybe five.”
The district likely will have to postpone equipment replacements that were scheduled and budgeted, he said, and hold onto those reserves.
The fire district has no intention of going to voters anytime soon to seek a property tax increase, according to Guion. The board members anticipated the drop in revenues, as all districts should have.
“We’re not concerned at all,” Guion said. “We think we’re in great financial shape.”
The town of Basalt relies more on sales tax revenues than property tax revenues, so that will dampen the blow somewhat. However, sales tax revenues are also down.
Kristin Becker, executive director of the Basalt library, said the board of directors and staff are looking at all services and staffing to see where cuts can be made. They anticipate a 38 percent loss in property tax revenues for operations, when combining its assessed values from Eagle and Pitkin counties. The operating revenues are expected to drop from $1,465,000 to $900,000, Becker said.
When Becker took the Basalt position in 2009, she learned of the financial realities looming in 2012 from directors of other libraries, and she and the library board started planning accordingly. Becker said they have enough cash in hand to go two or three years with reduced revenues without requiring a property tax increase by voters or an increase in assessed values.
The tough financial times already have altered the approach of some governments on tax issues. The Crown Mountain Park and Recreation District decided against seeking voter approval for a $25 million bond issue in November for a new indoor recreation center. The district’s board said too many constituents relayed that now is not the right time to seek a property tax increase to repay the bonds.
Local governments typically start plowing through their next year’s budgets in August, so the full implications of the lower assessed values will unfold into the fall.