UGRWCD considers reducing tax burden

As the Upper Gunnison River Water Conservancy District (UGRWCD) begins to establish its 2008 budget, one of the questions facing board members is if the organization’s mil levy should be adjusted to reflect changes in property tax.

 

A large jump in assessed property values across the county is affecting the budgets of organizations in different ways, but for the UGRWCD, which earns over 80 percent of its revenue from property taxes, this means much more revenue is expected in 2008.

According to UGRWCD board member Gary Hausler, the result will be an additional $400,000, "solely because of increase in assessed value."

The UGRWCD has a 2.0 mil levy on property values, which means for every $1,000 in a property’s taxable value the district gets $2. For 2008 the UGRWCD is expecting $1,590,341 in revenue and only $840,000 in expenses.

Hausler says the UGRWCD board can reduce the mil levy and reinstate it later without a public vote. "We can temporarily reduce the mil levy to reflect what we need income-wise," Hausler says. "The question becomes, is there a need for the additional revenue we take in?"

In September the board was presented with two budget scenarios. One scenario left the mil levy as is, and reflects the additional revenue. The other scenario drops the mil levy to 1.289, a rate that would result in property tax revenues in line with years past.

Board members against the mil reduction say the district needs the money for big water projects or future legal issues.

During a September budget work session, UGRWCD board member Ralph Grover said he was opposed to reducing the mil. Grover said the district was "de-bruced" (given control over its mil levy) because voters wanted to make sure their water was protected. Additionally, Grover said, there is always a possibility the district could get involved in a legal dispute that may require greater reserve funds.

Board member Bob Drexel agreed with Grover, and said the district may also need the money for future water projects, like a new reservoir or stream diversion. If the mil levy is dropped, that potential money will be lost forever, Drexel said. He added, under the current mil levy the increased property values represent only an additional $40 for the average household.

Board members in favor of reducing the mil levy say there are already healthy reserves and the district has no apparent need for the money. After the September meeting, Hausler said even if the mil levy was reduced, the UGRWCD would still be expecting over $200,000 to put into reserves. "Is there a project out there we need the money for, or is there an immediate threat? If not, return it," Hausler says of the tax money. Hausler says as far as he knows there are no major projects or legal threats currently facing the UGRWCD, although he admits a legal threat could come up at any time.

Board member Steve Glazer agreed with Hausler at the meeting and said the UGRWCD already has $1.3 million in reserves and they do not need $2 million.

Citing other tax issues the public will face within the next few years—such as funding for a new jail, school improvements, and a new library—Hausler says the UGRWCD should be careful what it asks for in taxes. "I believe there’s a maximum tax burden the people are willing to bear," he says.

If a healthy level of reserve funds is a critical issue, Hausler suggested creating a strategic reserve line-item to meet long-range funding needs.

UGRWCD manager Frank Kugel says such a line item could be useful in several ways. For example, strategic reserve funds could be set aside for generating climate change models or other opportunities for "making the district better able to deal with the adverse impacts of prolonged drought."

Kugel says the money could also be used for big water projects. "We have a number of projects we are in the very early stages of pursuing," Kugel says, citing the development of the Ohio Creek Basin for water supply needs.

Although the UGRWCD doesn’t have an immediate water project to finance, the board is considering the reinstatement of a grant program in its 2008 budget that would encourage local water projects. Kugel says the grant program isn’t new, but, "It was put on hold for the last few years. We wish to re-establish it."

If the board wishes to continue the grant program, Kugel says this time it would be organized to work in conjunction with the state’s water project grant program, as opposed to a stand-alone grant from the UGRWCD. The state’s water project grant program operates under Senate Bill 179, passed in 2006. Under this bill, the state sets aside $10 million each year for use in water projects, which could be anything from mapping climate change to repairing waterways. If a local developer is awarded a "179 grant" for use in a water project, the developer can then apply to the UGRWCD for a matching grant.

"Part of our goal is to make people aware we have funds available," Kugel says. He says the district’s former grant program was successful, and the Kemel Owens dam at the Whitewater Park in Gunnison is an example of a grant use that benefits multiple entities. "Those are the types of projects we would like to promote," Kugel says. "We’re still determining how much of a grant program we wish to establish."

The reinstatement of the grant program and possible change in the mil levy, along with other budget issues, will be addressed during a public hearing on the UGRWCD budget on November 26.