GARDEN CITY, Kansas – As local governments begin working on next year’s budget there is some concern that sinking oil prices will cause some trouble.
Real estate, personal property, and oil and gas make up a county’s taxable value, and with so much oil and gas in Southwest Kansas that’s a concern for some communities.
“A large percentage of their tax base is oil and gas,” explained Finney County Appraiser Maria Castillo.
Local governments rely on the oil and gas as part of their budget.
“Mineral valuations in Finney County make up about 20% of our budget,” said County Commissioner Larry Jones.
Oil and gas prices have plummeted in recent months, going from $100 a barrel last year to record lows around $45. When oil and gas make up such a large part of the total valuation in oil producing communities, a big change in oil one way or the other will have a big impact on the local budget.
A 50% cut in oil prices has led Finney County Commissioners to ask some tough questions about their 2016 budget.
“With that big decrease they’re really going to be hurting,” Castillo said.
“It will be a factor,” said Jones. “We either have to cut budgets to make up the difference, or we have to raise the mill levy and tax the other assessed properties higher. It’s a balancing act.” He said they plan on tightening spending first.
If oil and gas production increases enough to make up the difference the budget could be unaffected, but with the numbers against them Jones said they want to be prepared.
“You always have to be thinking ahead on these things,” he said.
Valuations will be calculated by May. At that point local governments can calculate specific changes for their 2016 budgets.