The good news is that Big Horn County valuation is expected to top last year’s mark by $60 million, meaning more money in county coffers this year. The bad news is that county officials and residents should prepare for drastic budget cuts in 2010 due to slumping gas and oil prices and production.
The state assessed values including oil and gas production and sales are all in except for railroad companies. Those figures won’t be official until the first week in July, said Big Horn County Assessor Gina Anderson.
In 2008, the county’s total valuation value reached $243,332,156.
The total local value assessed for private property in 2009 is $84,734,471, an increase of nearly $4 million over the 2008 figure of $80,856,332, Anderson said.
The official 2009 state assessed valuation, without railroad valuations, is $218,237,661.
“In 2008, railroad valuations were $5,213,215,” Anderson said. “With these figures, even if the railroad values don’t increase, it still looks like we’ll be up about $60 million.”
While county coffers are seeing the benefits based on 2008 sales, Wyoming producers are seeing a drastic decline in prices for oil and natural gas now.
The lower revenues from mineral taxes will not impact local government and education budgets until the last quarter of 2010.
Ed Schmidt, director of the Wyoming Department of Revenue (DOR), said in a recent press release that the difference in revenue between production year 2008 and 2009 is going to be a “severe shock.”
The irony is that county budgets appear healthy this year, even while natural gas sales and prices are tanking because mineral taxes are based on the previous year’s production.
State agencies are feeling the pain now because mineral severance taxes are reported and paid to the DOR within two months after they are produced and immediately deposited into the state’s General Fund for distribution, Schmidt said in the release posted on the Department of Revenue Web site.
“During this decade the real driver of mineral values in Wyoming has been natural gas prices, which in 2008 production year accounted for 59 percent of all mineral taxes in Wyoming,” he said.
In production year 2008, the average price of natural gas was $6.89 per Mcf (1,000 cubic feet per second), but gas prices in the first quarter of 2009 are one-third of what producers were receiving in 2008.
In its October 2008 forecast, the Consensus Revenue Estimating Group (CREG) predicted oil would be at $75 per barrel and natural gas at $5.50 per Mcf.
“Unfortunately, in the first quarter of 2009, gas prices have continued their freefall into the $2.75 per Mcf range,” Schmidt said in the release.