Phil Castle, The Business Times
Despite recent declines in activity, natural gas and oil production remains a crucial source of revenue for many Western Colorado counties and school districts.
It’s a connection that’s sometimes forgotten in the public debate over energy policy when it should remain an important consideration, said Craig Meis, a Mesa County commissioner who also works as an engineer at an energy consulting firm. “It’s huge.”
Natural gas and oil companies accounted for eight of the top 10 property taxpayers in Mesa County in 2011 with a combined assessed value of $253 million, Meis said. That’s more than double the assessed value of property in Fruita.
Those eight companies paid a total of more than $3 million in property taxes, he said.
The gas and oil industry play an even bigger role in neighboring Western Slope counties, accounting for more than half the total assessed value of property in both Garfield and Rio Blanco counties, Meis said.
Meis detailed the effects of the gas and oil industry on local tax revenues during a recent energy briefing hosted by the Grand Junction Area Chamber of Commerce.
Meis said gas and oil companies constitute such large revenue sources because of the different rates at which different types of property are taxed.
A property tax rate of 87.5 percent is imposed on the assessed value of primary natural gas and oil production, while a tax rate of 75 percent is imposed on the assessed value of secondary production. Oil and gas companies are allowed to deduct certain expenses from their tax bills, however, to lower assessed value.
By comparison, commercial and industrial property is taxed at 29 percent of its assessed value. Residential property is taxed at an even lower rate of just less than 8 percent of assessed value.
Consequently, $100,000 worth of assessed value in primary gas and oil production in Mesa County generates more than $2,600 in property taxes — assuming a 50 percent assessment rate counting net back deductions, Meis said.
Meanwhile, $100,000 worth of assessed value in residential property generates about $478, he said.
While the assessed value of natural gas and oil properties dropped almost 32 percent between 2009 and 2010, those properties still accounted for more than 8 percent of the total assessed value of property in Mesa County, Meis said.
In Garfield County, gas and oil properties accounted for nearly 59 percent of the total assessed value of property in 2010. Out of $52 million in projected property tax revenues for 2012,
73 percent will come from the gas and oil industry, Meis said.
In Rio Blanco County, gas and oil properties accounted for 50 percent of the total assessed value of property in 2010, Meis said.
The natural gas and oil industry accounts for an increasingly larger share of revenue in other Colorado counties as well, he said, among them Las Animas, La Plata, Moffat, Routt and Weld counties.
In addition to property taxes, gas and oil companies also pay state severance taxes and federal mineral leases.
There’s a separate distribution of federal mineral leases to school districts, Meis said.