Tax ‘drop’ impacts roadwork

Canadian County Commissioners prioritize projects, maintenance due to oil and gas downturn

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By Conrad Dudderar
Senior Staff Writer

A downturn in Oklahoma’s oil and gas economy is prompting Canadian County Commissioners to be extra cautious when prioritizing roadwork.

A significant drop in gross production tax revenues across Oklahoma has reduced funds appropriated monthly in commissioners’ maintenance and operation accounts.

The decline in Canadian County District 3 was about 37.75% between February and May, according to Commissioner Jack Stewart. Other county commissioners have seen similar declines in available funds.

Gross production tax revenues have been “dropping like a rock,” Stewart said.

“We’re going to have to rethink how we, as county commissioners, do projects,” he said.

“We can’t count on a constant cash flow anymore. We must have the money in the bank to start a project, although you can plan your work on what you estimate is going to come into the ‘m and o’ (maintenance and operation) account.

“We’re going to have to start eating into some of the balance or do less roadwork. We’re going to have to prioritize a lot harder if this continues.”

While he will be aggressive about addressing the most critical road projects and maintenance, the District 3 commissioner stressed he will be careful about what is done.

“A lot of the routine work will have to slide for the time being,” Stewart said.

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$60 MILLION LOSS

There has been an estimated $60 million loss in road maintenance dollars across all 77 counties, Canadian County Commission Chairman Marc Hader said this week.

Due largely to a boon in oil and gas operations, gross production tax has been the single-largest share of monthly road fund appropriations in recent years for Canadian County.

Portions of revenues derived from gasoline and diesel taxes and motor vehicle tag fees also provide county road dollars.

But the sharp drop in oil and gas activity has directly impacted Canadian County.

“I’m not scared, but we are a little nervous,” said Hader, the District 1 county commissioner. “Is there going to be a cliff we are going to fall off? That’s why we’re pulling back. I was going to be aggressive about some paving projects, but now I’m going to hold on to some money to do some lighter-cost maintenance projects and fewer full-blown paving projects.

“We’ll see how it goes. If it stays pretty level, I’ll try to ramp back up. I just don’t want to expend a bunch of funds and then not have revenues come in. We don’t want to be in a situation likes some municipalities of having to decide if we can make payroll.”

There is some relief on the way thanks to the state Legislature – just not as much as Canadian County’s commission chairman thinks is fair.

Oklahoma state legislators agreed to partially replenish counties’ maintenance and operation accounts with about $42 million. These monies will come from Oklahoma’s CIRB (County Improvement for Roads and Bridges) Fund.

Oklahoma has an annual cap of $120 million in this fund, which is split among Oklahoma Department of Transportation’s eight field divisions. Canadian County is among nine counties in Division 4.

Thirty five percent of the $120 million maximum amount is being earmarked to help counties with the loss in gross production revenues.

Chairman Hader had hoped the $42 million would be divided equally among all 77 counties  which would be about $545,454 each.

“That seems like the equitable thing to do,” Hader said.

But the legislature ended up using a CIRB Fund formula that factored in road miles, area and rural population to determine the apportionment.

Canadian County will end up with $432,732 in additional revenue after the legislation was signed by Gov. Stitt.

Officials from Canadian and Cleveland counties had asked the governor to consider a line-item veto to “restore it to the original intent of 1/77th,” Hader said.

Commissioner Stewart thanked state lawmakers for this “temporary” movement of money.
“We need it,” he said. “This will help reinstate some of the maintenance and operation money we’re going to lose due to the gross production drop.

“It will not be enough to make up the total amount we’re losing, but it will help ease the pain.”