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Bankruptcy, a slow death by: freezing Las Animas County in dire financial straits

by Bill Knowles

LAS ANIMAS — Las Animas County Assessor Jodi Amato delivered the bad news to a room filled with the county’s elected officials on Tuesday, June 14, who were there to begin looking at the 2017 budget. “There is no bright future on the horizon,” Amato said. “Without relief we could be facing some kind of bankruptcy.”

County administrator Leeann Fabec noted, “We’re going down the tubes here.” With county services approaching decay over time, the possibility of lay-offs and reduction in hours is fast becoming a reality. This means longer wait times to pay taxes, get vehicle tags, and, in short, to deal with anything the county requires its citizens to do.

And, with a reduction in staff, this could translate into longer wait times for emergency response crews to show up in the event of fire, illness, or criminal activity.

How the county arrived at this place:

Once, when oil and gas were king, Las Animas County was awash in funds. Data shows a climb in both the assessed valuation and the actual revenue. With records illustrating that in 1993 the valuation stood at $79 million, and with the mill levy set at 23.73, this generated revenue of nearly $1.9 million. For the next three years, with the mill levy at 23.73, assessed valuation grew as businesses grew generating more jobs.

By budget year 1997, the valuation stood at about $91 million, which generated actual revenues of around $2.1 million for the county, all based on a mill levy of 23.73, or $23.73 per $1,000 of assessed valuation on property.

Then the mill levy began to fall in budget years 1998 and 1999, with a final adjustment putting it at 22.811 in budget year 2000. After that, the Tax Payers Bill of Rights (TABoR) began kicking in, and the county began issuing tax credits to property owners, driving down the mill levy through budget years 2001 to 2005. By 2005 the county approached voters, requesting the mill levy be frozen at 9.357.

According to commissioner Gary Hill, the freezing of the mill levy is what brought about the downward spiral the county is currently experiencing. That, and the demise of oil and gas, along with coal as revenue and employment generators, are, according to Hill, the main drivers of the current economic malaise.

With revenues of nearly $9.2 million for budget year 2005, the county overshot TABoR by about $5.3 million. That was remedied with a tax credit of 12.657 mills for county taxpayers, reducing the mill levy to 9.357, which the voters then locked in, freezing the mill levy at its current level.

Geopolitics alive and well in Las Animas County

The general economy collapsed in 2008, and by 2010, the county collected its highest levels of revenues of $7.9 million based on valuations from 2009. However, with gluts in the natural gas market, 2014 saw coal bed methane operations in the county cease and Pioneer Natural Resources began its pull out. This caused a drop in property valuations, with property tax revenues falling from $3.8 million in budget year 2016 to a projected $3,070,766 million for budget year 2017, an estimated loss of $730,260, and a loss the county needs to make up.

As people began losing their property through foreclosures, the county loses revenues on the property taxes that could be collected. “Commercial and residential property sales are at a flat line, and any sales of property are below value and the county isn’t really seeing revenue from this. When you combine that with the collapse in natural resource prices, the county has been hit hard.” Amato said. “The county, at one time, saw oil and gas paying about 47.56 percent of the county’s total assessed value.”

This is a loss that is bleeding the county’s coffers of funds.

The county is now looking to raise the mill levy by 2.5 percent, with voter approval, to 11.857 mills. This could generate property tax revenues of an additional $820,446. The other option is to cut work hours at the county from 40 hours a week to 30 hours a week, saving $888,115 in expenditures.

Either way, the county is feeling pressure to do what is necessary to make up for lost revenue.