Natural gas slump decimates town of Parachute’s sales tax revenue

PARACHUTE — To understand the importance of the energy industry in Parachute, look no further than its 2015 sales tax revenue.

The town of about 1,100 residents finds itself coping with the economic fallout of yet another slowdown in natural gas development that — unlike in other cities and towns in Garfield County — is having an immediate and noticeable impact.

Sales tax revenue for the first three months of 2015 is down nearly 31 percent compared with the first three months of 2014. The most significant drop came in March, when the town collected $51,821 — less than half of March 2014 receipts and nearly $12,000 less than what was budgeted.

Meanwhile, most neighboring communities are seeing more stable collections, including Rifle, where revenue for the first three months of the year is up 2 percent compared with 2014. Glenwood Springs’ revenue was up 7.4 percent last year and has remained strong in 2015.

“The town of Parachute, more so than any other town in the county, is predominantly dependent on the oil and gas industry,” said Stuart McArthur, town administrator.

That dependence on a currently stagnating industry is forcing the town to tighten its belt. Three vacant positions, including one in the police department and another in public works, will not be filled, McArthur said. Parks are being mowed less frequently and the police department is relying on help from the Garfield County Sheriff’s Office to fill any gaps in law enforcement.

“We have to look at what absolutely has to get done and then go down the priority list from there and see what we can go without for the time-being,” McArthur said.

While the town is trying to cover revenue shortfalls, those who depend on the oil and natural gas business for employment are seeing jobs disappear — an all too common experience.

“You get used to it when you live here long enough,” said Mayor Ray McClung. “It’s never easy to take, but you come to expect it.”

McClung, a fourth-generation Parachute resident who has spent much of his working life in the energy industry, recently lost his job with an energy resource and development company. At his former employer’s request, McClung declined to name the company.

McClung’s situation is not uncommon. Plummeting oil and natural gas prices have forced producers across the country to find a break-even point, which translates to layoffs and a freezing or reducing of activity, said Brian Lewandowski, associate director of the Business Research Division in the Leeds School of Business at the University of Colorado Boulder. While the drop has been good for consumers, the slowdown will likely have an overall negative impact on the state’s economy, said Lewandowski.

In Garfield County, the number of active rigs stands at seven, down from 10 in December 2014, according to the most recent rig data from Community Counts and data presented to the Garfield County Energy Advisory Board in February.

WPX Energy operates two of those seven rigs. In March, the company announced it was eliminating 11 jobs at its Parachute office, along with 156 jobs at its regional office in Denver.

With so much uncertainty in the energy sector, more belt-tightening is not outside the scope of possibility, but the company is flexible and could increase operations if the prices start climbing, said Susan Alvillar, WPX spokeswoman.

Despite the current state of the industry, McArthur and McClung are optimistic about Parachute’s future. In the short term, the town is pushing events, such as the annual Oktoberfest and Grand Valley Days, to bring in more sales tax revenue. More importantly, though, the town must diversify its economy, a fact that McArthur said he realized immediately after taking the job in February 2014.

“I saw very quickly that the town is so very dependent on oil and natural gas that we had to do something to diversify,” he said.

In late April, the town started working with Better City, a consulting firm specializing in economic development, to draft a comprehensive plan with the goal of attracting more businesses to the area. The company’s track record gives reason to be optimistic, according to McArthur.

In the meantime, the town is doing its best, said McClung.

“There is a lot of caution,” he said. “People are hunkering down, but at the same time I think everybody is optimistic. You have to be optimistic to survive.”

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