The Energy Industry s Economic and Fiscal Impacts to Garfield County

Transcription

1 The Energy Industry s Economic and Fiscal Impacts to Garfield County October 5, 2017 Photo Credit: Ryan Mackley at Align Multimedia

2 The economic and fiscal impacts of the energy industry in Garfield County are significant to the financial well-being of Garfield County government, special districts and its citizens. This presentation will discuss the importance of the energy industry s presence in our community and the influence it has on the County s ability to provide quality service to its community.

3 Presentation Overview Economics 101 Energy Industry Trends Economic Trends Economic Impacts Fiscal Impacts

4 What are economic impacts? Economic impacts are effects on the level of economic activity in a given area. These are viewed in terms of: Business output or sales volume Value added or gross regional product Wealth, including property values Personal income, including wages Jobs

5 What are fiscal impacts? Fiscal impacts are changes in government revenues and expenditures. Fiscal impacts can be brought about by economic impacts which affect government revenues and expenditures by: Expanding or contracting the tax base Changing demand for public services

6 Energy Industry Trends Photo Credits: Ryan Mackley at Align Multimedia

7 Bcf Garfield County Natural Gas Production Trends Garfield County Natural Gas Production Source:

8 Henry Hub US Natural Gas Spot Price $12.0 Henry Hub US Natural Gas Prices $10.0 $9.65 $8.0 $8.56 $7.87 $7.68 $6.0 $4.0 $4.45 $5.24 $4.02 $5.89 $6.53 $5.33 $5.49 $5.13 $3.88 $4.64 $5.62 $3.91 $3.51 $2.0 $ HHB Spot Price Source:

9 Active Drilling Rigs in Garfield County 6 Garfield County 2 Mesa County 1 Rio Blanco County (not shown) Source: Baker Hughes Rig Data website Updated 10/3/2017

10 Historic Drilling Activity in Garfield County 80 Number of Drilling Rigs Source: Garfield County Oil and Gas Department Updated 8/1/2017

11 Annual Well Starts in Garfield County Annual Gas Well Starts in Garfield County Source: Garfield County Oil and Gas Department Updated 9/1/2017

12 BCF Garfield County vs State Natural Gas Production 800 Top 10 Counties GARFIELD WELD LA PLATA MONTEZUMA LAS ANIMAS RIO BLANCO MESA DOLORES 100 YUMA MOFFAT Source:

13 Economic Trends

14 Thousands Per Capita Personal Income 60,000 Per Capita Income 50,000 40,000 Source: 30,000 20,000 10, Garfield County 43,121 44,490 40,781 36,387 39,491 41,257 44,579 49,114 50,556 State 41,996 42,663 39,838 39,926 42,955 45,089 46,824 49,952 51,876

15 Unemployment Rates 10% 8% 6% 4% 2% 0% Unemployment Rates Garfield County 9% 8% 7% 5% 3% 3% 2% State 8% 8% 7% 5% 4% 3% 2% National 9% 8% 7% 6% 5% 5% 4% Source:

16 Garfield County Employment by Industry Sector Qtr Industry Sector # Employees Health Care and Social Assistance 3,282 Retail Trade 3,107 Accommodation and Food Services 2,962 Construction 2,845 Education Services 2,761 Public Administration 1,701 Professional Scientific & Technical Svc 1,080 Admin., Support, Waste Mgmt, Remediation 965 Mining 946 Other 770 Oil & Gas Related 2016 Direct Oil & Gas* 995 Indirect Oil & Gas** 475 Total Oil & Gas 1,470 *Colorado Department of Labor and Employment (December 2014) **Using Emsi labor market analytics multiplier Source: Garfield County Oil and Gas Department Updated 8/1/2017 Source: Colorado Department of Labor and Employment

17 Colorado Employment Projections by Industry 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Projected Employment Change by Industry Sector Colorado ( ) Source: Colorado Department of Labor and Employment

18 Economic Impacts

19 Assessed Valuations and Property Tax Assessed value is the value of all property in the County and an economic measure of overall wealth (economic impact). Property tax revenue supports public schools, county government, special districts, municipal governments and junior colleges. All of the revenue generated by property taxes stays within the county (fiscal impact).

20 Garfield County Assessed Valuation Distribution 2016 Public Utilities 5% Vacant Land 4% Residential 22% Oil and Gas 54% Commercial 14% Source: Garfield County Assessor s Office 2016 Abstract Oil Shale 0% Natural Resources 0% Industrial 0% Agricultural 1%

21 Billions Garfield County Assessed Valuations $6.00 $5.00 $5.16 $4.00 $3.00 $2.00 $3.27 $2.23 $3.80 $3.41 $2.03 $3.76 $3.84 $2.72 $2.87 $2.89 $2.03 $3.18 $3.41 $2.32 $2.39 $2.21 $1.00 $1.19 $ Oil and Gas Total Assessed Valuation Source: Garfield County Assessor s Office Abstracts

22 Garfield County Oil and Gas Assessed Valuations 80% 70% 60% 50% 40% 30% 20% 10% 0% Oil and Gas % of Total Assessed 68% 74% 72% 75% 70% 73% 70% 60% 54% Source: Garfield County Assessor s Office Abstracts

23 Gallagher Amendment (1982) 55% Non-Residential 45% Residential Stabilization of the tax burden on the residential property class. Approximately 80% of Colorado s property is classified as residential. Division of property taxation conducts a study to determine two things: 1. New target percentage 2. An estimate of the residential assessment rate needed to achieve the target percentage

24 Change in Garfield County Assessed Valuation % 10.0% 0.0% -10.0% 11.4% 1.2% 1.2% 0.0% 0.6% Vacant Land Residential Commercial Industrial Agricultural Natural -1.5% Resources Oil and Gas 1.6% Public Utilities -20.0% -30.0% -40.0% -50.0% -50.4% -60.0% Source: Garfield County Assessor s Office Abstracts

25 Fiscal Impacts

26 Garfield County Revenues 2017 Adopted Budget Revenues by Source 2017 Adopted Taxes 42,906,199 Intergovernmental 29,580,952 Charges for Services 9,928,207 Miscellaneous Revenue 5,041,050 Investment Earnings 2,715,075 Fines and Forfeitures 115,000 Licenses and Permits 133,000 Contributions 926,125 Total $ 91,345,608 Miscellaneous Revenue 6% Charges for Services 11% Property Taxes $30M Sales Taxes $10M Specific Ownership Taxes $2.5M Investment Earnings 3% Intergovernmental 32% Contributions 1% Taxes 47%

27 How important is the industry s presence to our local economy? 2016 Actuals 2017 Adopted Total revenues $ 103,521,888 $ 91,345,608 Total tax revenues $ 57,798,496 $ 42,906,199 Derived from property tax $ 46,190, % $ 30,236, % of overall revenue Oil and Gas related property tax $ 32,333, % $ 16,327, % of overall revenue 30% of all Garfield County revenues are derived from property taxes on oil and gas production

28 Garfield County Property Tax Revenues $80 $70 $60 $50 $40 $30 $20 $10 $ $17 $24 $35 County Property Tax Revenue $39 $45 $70 $47 $51 $ (YTD) $39 $42 $46 $30

29 Millions Bcf Garfield County Property Tax Revenues and Related Production $80 $70 $60 $50 $40 $30 $20 $10 $ $24 $35 $39 $45 $70 $47 $51 $ (YTD) County Property Tax Revenue $39 $42 Production $46 $

30 Garfield County s Top 10 Taxpayers Company Taxes 1TEP Rocky Mountain LLC $ 18,981,016 2Encana Oil & Gas (USA) Inc $ 7,851,930 3Vanguard Operating LLC $ 2,961,834 4URSA Resources Group LLC $ 2,812,258 5Bargath, Inc. $ 2,427,933 6Public Service Company of Colorado (XCEL) $ 1,833,262 7Laramie Energy LLC $ 1,690,356 8Hunter Ridge Energy Services, LLC $ 1,112,255 9Caerus Piceance LLC $ 1,098,751 10Chevron North America Explo & Prod Co $ 1,020,060 Source: Garfield County Assessor s Office ( )

31 Garfield County Districts Who Benefit from Oil & Gas

32 Other Energy Related Revenue Sources Mineral Severance - $2,000,000 Colorado Severance Tax is a tax imposed upon nonrenewable natural resources that are removed from the earth. Natural resources that are subject to severance taxation include: metallic minerals; molybdenum; oil and gas; oil shale; and coal. Specific Ownership Tax - $2,500,000 The specific ownership tax is a property that is levied in addition to sales (or use) taxes on a motor vehicle and is paid annually when the vehicle is registered within a county. The tax is imposed on every motor vehicle, trailer, semitrailer, or vehicle that is operated on any state highway. Moneys collected are used to fund local governments, including school districts. BLM PILT $3,000,000 Congress appropriates PILT payments each year according to a formula that includes population and the amount of Federal land within an affected county. These payments are in addition to other Federal revenues that the Federal Government transfers to the States. These revenues are derived from commercial activities on Federal lands, such as oil and gas leasing, livestock grazing, and timber harvesting. As oil and gas activity escalates the County can expect increased revenues in: Sales Tax Licenses/Permits (Road & Bridge Fund, Community Development) Landfill Usage It all adds up!

33 Operator Contributions Operators continue to support local community events and organizations including United Way Annual County Fair and Livestock Auction 4H Programs Operators have contributed significantly in prior years to various programs throughout Garfield County Several natural gas development companies gave substantial gifts to the college in 2005 to expand workforce training and help to build a new campus. Western Garfield County was rich in natural gas, exploration companies were looking for trained workers and local residents needed well-paying jobs. Two of the leading energy companies operating in Garfield County at the time, Encana and Williams, made sizeable donations to kick-start a capital campaign to build a new academic building in Rifle. Encana's $3 million gift, followed by Williams' $1 million, put the college well on the road to meet a $6 million goal to build a new campus in Rifle. CMC Succeeds, Post Independent, September 30, 2017

34 Operator Contributions A number of both Garfield County and local projects have been and are supported by our Oil and Gas operators. Example: 2009 Reconstruction of CR204 Total Cost: $ 22,972,539 Funding Sources: Garfield County $ 1,500,000 DOLA $ 1,500,000 Chevron $ 19,972,539

35 Operator Contributions In 2009, in addition to the Chevron contribution, monetary contributions totaling $1,416,209 were received from: Antero Resource Bill Barrett Corporation Encana Enterprise Gas LLC Laramie Energy LLC Noble Energy Oxy USA S G Interest Williams Production RMT Contributions were used to assist the Road and Bridge Department for payment for MAG Chloride, water trucks, gravel and asphalt paving and road repairs (CR326, CR301, CR306, CR309).

36 Operator Contributions Ursa Resources contributed $50,000 for site specific air monitoring in Battlement Mesa (2016 Garfield County Public Health Annual Report)

37 Garfield County s Oil and Gas Mitigation Fund Established by BOCC in 2006 for the receipt and expenditure of monies towards the mitigation of adverse property, social and environmental impacts of oil and gas related activities. Current fund balance (reserve) is $12.5M Revenues sources include: state severance tax on energy and mineral production and historically federal mineral lease (FML) dollars. Since 2011 all FML monies have been redirected to the FML District.

38 Garfield County s Federal Mineral Lease District The Garfield County Federal Mineral Lease District is an independent public body charged by the state legislature with distributing financial resources it receives from the development of natural resources on federal lands within Garfield County to communities impacted by these activities. The FML District is also authorized by law to provide services to those communities. The FML District exercises an essential public function: to alleviate social, economic, and public finance impacts resulting from federal mineral leasing activities in our Communities Fall Grant Awards: $400,000 GWS 7 th Street Construction (Phase I) $300,000 City of Rifle W. 5 th Street Reconstruction $200,000 Town of Silt Wastewater Line Relining Project Source: Spring Grant Awards: $210,000 Town of Silt Senior Housing Improvements $126,778 RE-1 School District School Bus Radio Upgrades $300,000 City of Rifle South Waterline Integration Project

39 What it all means? The economic and fiscal impacts of the energy industry in Garfield County are significant to the financial well-being of the County, both to the government and the area economy as a whole including all the special districts. Supports the County s primary mission: the delivery of quality services to Garfield County.

40