The Dreaded Infrastructure Investment
Why is investment in infrastructure so hard? It’s not a sexy topic. Much more fun for those of us who live, recreate, and do business in western states with dynamic, growing populations to talk about parks and recreation, e-bikes, commerce and trade - than to discuss roads and bridges. Of course we want, need and expect serviceable and efficient infrastructure, but when it comes to footing the bill we drag our feet.
It is the responsibility of our local governments to provide safe and reliable infrastructure, including the structures, facilities and systems necessary to support healthy and functional economies for business, industry and everyday living.
We assume that our locally elected officials will invest time and energy planning for the future so that infrastructure keeps pace with population growth, volume of traffic, and the needs of local residents. It’s critical to the long-term health and well-being of a community to appropriately budget and take proactive steps to secure sufficient funding to maintain consistent and adequate infrastructure.
Times are Changing
La Plata County, Colorado, where I live, has been in the enviable position for many years of the oil and gas sector subsidizing a significant portion of infrastructure needs. At one point, The Durango Herald noted that the oil and gas industry had funded nearly 80% of road and bridge construction and maintenance in this article, published in October, 2015.
Taxes levied on oil and gas production over the past several decades have translated into La Plata County having the 4th lowest property tax rates in the State of Colorado, with no increase in rates for residents for the past 25 years.
Not all good things last forever and times are changing in La Plata County, as they are in many rapidly growing communities throughout the West. Our locally elected officials have identified two pressing infrastructure needs that will require funding from residents - Roads/Bridges and the Airport. Initiatives targeting both of these issues will be on the ballot in November. There will be a third proposed local mill levy increase as well, to benefit Durango School District 9R and the public charter schools.
NOTE: The focus of this article is Roads and Bridges. I will address the Airport in a future post.
Photo Courtesy Gunnarconrad.com
Roads and Bridges Mill Levy Ballot Initiative
Funding for Roads and Bridges is a discretionary governmental expense. Funds are appropriated annually and are based on County income and expense projections. Four primary revenue streams provide funding for road and bridge projects: property taxes, sales tax, highway-user tax funds, and intergovernmental grants.
Today, oil and gas property tax revenue to La Plata County is down an estimated 60 percent from the revenue generated in the years 2010-2015, due to the decline in local oil production and gas prices nationwide.While motorists are enjoying lower gas prices at the pump, declining natural gas production has resulted in a significant reduction in the state severance taxes that fund energy impact grants. La Plata County has received $16.3 million in energy impact and other grants for roads and bridges projects since 2002. The state estimates that these grants will decrease by at least 50 percent in 2016 and beyond.
Our funding sources for new road and bridge projects and maintenance in La Plata County are no longer reliable. We are not alone - other oil rich states that have depended on oil and gas industry subsidies - such as Alaska, Wyoming, West Virginia, Texas, Oklahoma and North Dakota - face similar fiscal crises. Do we in La Plata County wait until our road and bridges are in desperate need of repair and then address the issue, or do we take proactive steps now?
We, the voters, will have a say this November.
Very recently, in November 2015, voters in La Plata County said no to a mill levy increase on residential property taxes to fund roads and bridges maintenance and construction projects. In July 2016, the La Plata County Board of Commissioners voted to again bring the issue to voters’ attention, placing it for the second time on the public ballot, during the upcoming November 2016 election. Considering the “no” vote of just one year ago, it may seem odd for the commissioners to raise the issue again so soon.
Here’s a primer to understand why Commissioners consider this issue so pressing, and what is at stake.
Background Roads and Bridges
La Plata County has 653 miles of county roads, serving approximately 56,000 residents. 222 miles are paved and 431 miles are gravel. The County’s Roads and Bridges Department is responsible for construction and maintenance of road and bridge projects and their work includes snow plowing, grading, dust suppression, roadside mowing, street sweeping, gravel application, striping, signage, and guard rails.
The Board of County Commissioners, in a recent presentation to City Council, reiterated that ensuring a safe, reliable and efficient road system is a key responsibility of county government. As our county population continues to grow, traffic volume increases, causing wear and tear on county roads. The need to address the situation is only going to become more critical - according to the U.S. Census Bureau and Colorado State Demographer’s Office, La Plata County’s population of 54,668 in 2015 is projected to be 61,785 by 2020.
A citizen’s advisory group, the Long Term Finance Committee, was established in 2013 and charged with assessing La Plata County’s financial situation in view of the decline in revenue, in order to make recommendations to the County.
After multiple meetings and discussions, the Committee recommended that the Board of County Commissioners ask voters for a property tax increase of 2.4 mills (see discussion below on mill levies) to address the current funding gap and continuing downward trends. The increase in property taxes associated with a 2.4 mill levy increase would bring in approximately $4.5 million in the first year of funding in 2017 to help pay for needed Road and Bridges Department maintenance and constructions projects. Projects to be funded over the 10 year road improvement plan would include: 24 miles of road reconstruction, 32 miles of paving, 3 intersection improvements and 8 bridge and drainage projects. The increase in property taxes would sunset in 10 years and go away. Any future increases beyond this time would have to go back to the voters for reconsideration.
Mill levies and calculating property taxes
Mill levies are voter-approved tax rates that are applied to property taxes, using a state mandated formula. Although La Plata County property taxes are payable to the county, the revenue is allocated to various government and service authorities throughout the county, including cities (Durango, Bayfield and Ignacio), school districts, fire protection authorities, and more. Your property taxes depend on which district you reside in within the county.
Across the state of Colorado, there is a flat assessment rate for residential property, regardless of what county you live in. Presently it is 7.96 percent of the appraised value of your home (in other words, your home’s appraised value X 0.076 = its assessed value). You can then multiply your home’s assessed value by your own county’s mill levy to determine your residential property taxes.
The formula for La Plata County reads like this:
Your home’s appraised value X 0.0796 X mill levy
The current mill levy in La Plata County is 8.500 mills. The recommended increase of 2.4 mills would bring the mill levy to 10.90.
Property Tax Simulator
La Plata County has two property tax increases that will be on the ballot in November of 2016, the Roads and Bridges proposed mill levy increase, as well as the Airport proposed mill levy increase. To help you determine the estimated yearly property tax increase for either or both initiatives, based on your own individual property’s assessed value, the Assessor’s Office has created a user-friendly property tax simulator. To understand the impact to your own personal property taxes, here’s a great resource.
Cost of Proposed Tax Increases
The Roads and Bridges ballot initiative will call for a 2.4 mill levy property tax increase. For a residential property owner with a house valued at $400,000, the cost of this initiative will be $76/year or $6.33/month (annual tax increase). The increase would sunset in 10 years. For a commercial property valued at $1 million, the cost would be $695/year.
The Airport ballot initiative will call for a 1.742 mill levy property tax increase. For residential property owners with a house valued at $400,000 the cost of this initiative will be $55/year or $4.62/month (annual tax increase). The increase would sunset in 20 years. For a commercial property valued at $1 million, the cost would be $504/year.
The combined mill levy increase, if both Roads and Bridges and the Airport ballot initiatives pass, would be a 4.142 mill levy increase. For residential property owners with a house valued at $400,000, the cost of both ballot initiatives would be $131/year or $10.95/month. For a commercial property valued at $1 million, the cost would be $1,199/year for both initiatives.
Note, that these numbers are approximations and numbers have been rounded for ease of explanation.
For More Information
The League of Women Voters will host a Forum on October 6th, at Durango City Hall, 6pm-8pm, to discuss the proposed Roads/Bridges, Airport and School mill levy tax increases on the ballot for November.
In Summary
While no one “likes” higher taxes, the proposed mill levy increase is one solution to funding critical infrastructure needs for our roads and bridges. At some point we may determine this to be a worthwhile tax increase - or face a slow deterioration of our roads and bridges that could impact safety, commerce and the overall image and ambience of our town.
Funding is not inspiring and doesn’t make for stimulating conversation - rather, it’s like making an appointment with the dentist. Do we recognize the value of preventative maintenance, dental flossing and having regular cleanings, or do we postpone, wait, and get the cavity filled later?
The infrastructure issues facing La Plata are mirrored all across the West, as communities, both large and small, grapple with growth and the strain on infrastructure that follows in its wake.
Resources:
La Plata County, services and property tax information: http://co.laplata.co.ushttp://co.laplata.co.us (See ‘Road and Bridge’)
La Plata County Assessor’s Office portal (for property valuation information):
Understanding Property Taxes in Colorado PDF.
Doubling Down,” article, Durango Telegraph, July 21, 2016
“Candidate, ballot issue forums planned for La Plata County,” article, Durango Herald, September 17, 2016
“La Plata County roads wearing thin,” article, Durango Herald, August 27, 2016
“Durango school board endorses La Plata County road, bridge tax, article, Durango Herald, Sept. 2, 2016.
“If ballot measure pass, La Plata County property taxes would stay low, article, ”Durango Herald, August 14, 2016
“Mill Levy Increase to go to Voters,” article, Durango Herald, October 2015
For information related to the Roads and Bridges Campaign:
-Visit the website – http://yesforroadsandbridges.com.