Showdown looms over property tax rates

"I’m worried that our local boards have a double standard," said San Juan County Commissioner Phil Lyman. "They say that they are budget driven, but when the assessed valuation increases, then they claim to be revenue driven."
Lyman’s comments were part of the discussion at the June 20 meeting of the San Juan County Commission. The June 20 commission agenda included an action item to set the 2011 tax rate, but after long discussion, the item was tabled until the June 27 commission meeting.
State law requires that tax rates be set by July 1.
At issue is a $120 million increase in the assessed value of county properties, from $846 million in 2010 to $967 million in 2011. The increase is primarily in centrally-assessed property values, including oil, gas and mining operations.
The 14 percent increase in the tax base in the past year means the county can collect up to $400,000 in additional property tax without increasing the tax rate.
Lyman is pushing for a "revenue neutral" approach, with the property tax rates reduced to a rate that will ensure the same overall revenue.
County projections are that such an approach will amount to a $40 decrease in property tax on a $150,000 home.
While Lyman has been urging other taxing entities, including municipalities and the school district, to adopt a similar approach, the San Juan County Commission is not yet convinced the county should adopt the approach.
"We need to take advantage of increases in the tax base because the general trend is an overall decrease," said Commissioner Bruce Adams.
Adams prefers that the county save the excess funds and put them away in reserve. That approach has been the general county strategy for the past three decades.
Cash and investments created by the county in the 1980s reached a value of $44 million in 2003. At the current time, the balance is $35 million. The balance was created by commissioners as a sort of "rainy day fund" that will allow the county to continue to offer a certain level of services even as the property tax base drops.
The San Juan County tax base has eroded over the previous 25 years, with centrally-assessed properties leading the decline. In 1988, centrally-assessed properties made up more than 88 percent of the tax base. At the current time, they are roughly 62 percent of the total tax base.
As the centrally-assessed values fall, locally-assessed properties, including homes, carry an increasing portion of the tax load
The tax base peaked at $911 million in 1986, before plummeting to as low as $377 million in 2000. The values have increased in recent years until they finally reached the 1986 levels with the most recent valuation, which was released this month.
The ability of other taxing entities to adopt a “revenue-neutral” approach may be limited. The City of Monticello faces severe budget shortfalls and, to date, has not included a tax decrease in the budget calculations (see the story on this page).
On June 15, the San Juan School District set the tax rate to not exceed the certified rate. Excess school district funds are poured into capital projects, resulting in debt-free remodeling projects at high schools in Montezuma Creek, Blanding and Monument Valley and a new elementary school in Monument Valley.
The calendar calls for remodeling at Monticello High in 2012 and a new elementary school in Monticello beginning in 2013.