(Source: By Sonny Long, Victoria Advocate, Texas (MCT) CUERO – DeWitt County commissioners are in a taxing dilemma.
While the county is experiencing an economic boon because of the oil and gas activity associated with the Eagle Ford Shale, commissioners – like those in every county – are faced with deciding an appropriate property tax rate for the upcoming budget year.
The dilemma lies in how much money will be needed to repair the county’s roads that are being ravaged by the increase in large truck traffic from the Eagle Ford Shale play.
The tax rate could be set at the effective rate of 32.617 cents per $100 of assessed valuation, which would generate the same amount of revenue as last year’s budget.
But commissioners – Curtis Afflerbach, John Oliver, James Pilchiek and Donald Kuecker – and DeWitt County Judge Daryl Fowler have proposed a 2012-13 tax rate of 50.203 cents per $100 of valuation.
That rate is lower than last year’s rate of 53.822 cents per $100 valuation and would result in a tax bill for an average home that is about $8 less than last year’s bill.
The rate would generate considerably more revenue than the 2011-12 rate. Property taxes generated $3,357,433 in 2011-12, and if the proposed tax rate is adopted, it will generate $5,435,697 in 2012-13.
Because the proposed rate is higher than the allowed rollback rate, taxpayers in the county could petition for an election to set the tax rate at the rollback rate. The rollback rate allows an 8-percent increase in maintenance and operations tax.
If an election is held and the proposed rate defeated, the rollback rate of 34.679 cents per $100 valuation would raise $472,000 more in tax revenue than in 2011-12.
“Proposing to increase our tax revenue by more than 50 percent makes the commissioners court look like spendthrifts when really we are not,” said Fowler. “Rural counties do not have limitless income potential just because the tax base is exploding.”
The tax base in DeWitt County increased by $783,132,760 since last year.
In January, the commissioners court hired Naismith Engineering of Corpus Christi to study the county road system.
The study evaluated 394 miles of DeWitt County roads and determined that the cost of providing a road system suitable for the public and the oil and gas industry could cost as much as $432 million.
The study revealed that 45 miles of annual road maintenance would cost $80,000 per mile with 187 miles of basic reconstruction at $920,000 per mile and 99 miles of major reconstruction at $1.9 million per mile.
The county judge also noted that Eagle Ford Shale play has not only resulted in the rapid deterioration of the county’s road system, but also an increase in administrative needs in the county clerk’s office, in civil and criminal court dockets and in law enforcement patrols.
“The prudent path is to slowly guide the tax rates down to capture funds for road repair until state assistance is available,” said Fowler.
Reallocation the answer?
Fowler has been going to Austin in recent weeks meeting with legislative leaders and budget and police advisors to the governor, lieutenant governor and speaker of the house.
“We want money to help maintain our roads. That’s all we are asking for,” he said.
Part of that money could come from a reallocation of a severance tax that the state imposes on the sale of oil and gas sales, Fowler said.
From DeWitt County alone, that tax generated $57.5 million in revenue for the state in fiscal year 2011, Fowler said, citing figures from the Texas Comptroller of Public Accounts.
The county judge said that two of the companies drilling in DeWitt County – Petrohawk Energy in 2010 and Pioneer Natural Resources in 2011 – have entered into voluntary agreements with the county and pay $8,000 per new well drilled.
The county also receives money from the state for overweight axle fees and gasoline tax and also received surplus materials. In FY2011, DeWitt County received a total of $112,293.
“We’re basically left on our own to fend for ourselves for road maintenance,” Fowler said.
Fowler would like to see changes in how the severance tax is allocated.
Currently, 25 percent of the funds go to the permanent school fund and 75 percent goes to the general fund, economic stabilization fund, also known as the “Rainy Day Fund.”
The county judge is proposing changing the 75 percent allocation to include Texas Department of Transportation districts and county governments in counties where drilling is taking place.
Damages would be paid for as the drilling takes place. It’s self regulating, Fowler explained.
Legislative assistance
His concerns are not falling on deaf ears.
Both Sen. Glenn Hegar and Rep. Geanie Morrison have heard the message that Fowler, who serves on the Energy Solutions Task Force commissioned by the Texas Department of Transportation, and other county judges are sending to Austin.
“I have spent a lot of time traveling in DeWitt County and I have witnessed first hand the judge’s concerns,” said Morrison. “Most of our roads were not designed or built to handle the volume of truck traffic we are experiencing.”
Morrison said she will work with Fowler to find legislative solutions.
Fowler also has Hegar’s ear.
“Judge Fowler and I have visited several times already and will continue that dialogue as we look to refine solutions to the challenges presented by Eagle Ford oil and gas production,” Hegar said.
“This production brings tremendous gains to local residents, cities, counties, and to the state, but with that we also have severe problems including, first and foremost, safety for travelers on area roadways, as well as the accompanying issues of strain on the local workforce and degradation and congestion of roads.
“The safety and other concerns regarding roads are not limited to those maintained by the county, but also extend to those under state and city control. Eagle Ford oil and gas production has been tremendous for Texas, but the challenges it has presented definitely have my attention.
“One of my priorities for the upcoming legislative session will be to come up with workable solutions for my colleagues from across the state who benefit from Eagle Ford activity, but are not as familiar or directly affected by the very real safety impacts we face,” Hegar said.
Commissioner Afflerbach wants taxpayers in the county to know that the proposed tax rate was not entered into without a lot of deliberation.
“We think it’s the right thing to do for the county, not for our current problems, but for those that follow us,” he said. “We’re not only looking at current issues, but looking at the future, too.”
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©2012 Victoria Advocate (Victoria, Texas)
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