Collapsing crude prices are squeezing the finances of Kern County, home to three-fourths of California's oil production.
The leaders of the jurisdiction of 864,000 people about 110 miles (180 kilometers) north of Los Angeles declared a fiscal emergency Tuesday after the commodity slumped 60 percent since June. The decline may reduce property-tax collections, the county's largest revenue source, by almost 15 percent in the year beginning July 1, said Nancy Lawson, the assistant county administrative officer.
While the emergency status is a prerequisite to filing for Chapter 9 bankruptcy in California, Lawson said the declaration doesn't signal that the county will take that step. Instead, it will access a $40 million reserve and perhaps scale back firefighter staffing.
"We were looking quite positive before this happened," Lawson said of dropping crude prices. "Unfortunately, our advances in wind and solar power weren't enough to offset the issues with oil prices."
In 2013, California produced more oil than every state except Texas and North Dakota, according to the U.S. Energy Information Administration.
Kern County's assessor factors in the price in determining the value of oil fields and natural-gas extraction operations. The assessor has indicated the local value for the year beginning July 1 will be $55 a barrel, or $44 less than this fiscal period, according to a report to the board.
Cheaper oil may depress property-tax collections by $44 million next year, and consume $17 million from a $90 million special assessment for fire protection, Lawson said.
The county has about $884 million of debt, according to data compiled by Bloomberg. That includes $200 million of notes maturing in about five months.
The debt priced to yield 0.11 percent, compared with 0.21 percent for benchmark securities. Standard & Poor's gave the notes its highest short-term rating.
The county also has appropriation bonds. S&P rates them A+, the fifth-highest grade.
