Last year, Utah received a record amount of money from the federal government in mineral lease revenues and bonus money that fund millions of dollars in rural projects.
This year, the state and local planners are facing the effects of a nationwide shutdown of the federal agency's computer — resulting in "estimated" payments that are running about half of what Utah received last year.
In fiscal year 2001, Utah received more than $46 million from the federal government for its share of mineral revenues produced on federal lands. This year, for the same period, the figure is at $25.7 million, down 44 percent.
Those suffering most from the funding decline are rural counties and small communities statewide that rely on payments from Minerals Management Services, a branch of the U.S. Department of Interior, for roads, sewer systems, ball fields and other costly infrastructure improvements.
"It's ridiculous the federal government has let it go this far," said Emery County recreation director Shannon Hiatt. "They are paralyzing rural Utah."
The shortfall has already derailed about $2.5 million intended for road projects in Uintah County alone, where money managers are dealing with late payments far short of what they received last year.
Cheri McCurdy, the county's special service district's executive office manager, said the agency received $4 million in mineral revenues last year and is down to $1.5 million for the fiscal year ending June 30.
McCurdy said the shortfall forced the county to spend carryover money from last year and delay improvements to energy-impact roads in the Vernal area, which relies heavily on its oil fields.
"We have definitely scaled back several worthwhile projects and lost other projects we could have done. It makes it hard to plan," she said.
Hiatt fears the worst if the shortfall continues. "It's huge. It has put us in a real bind."
His tiny department survives on a quarter of million dollars a year, supporting softball fields, campgrounds, pavilions and other youth sports.
This year's quarterly mineral payment is less than half of what it was in 2001, and the check due on May 1 still hasn't arrived. He's tapped into reserve funds, but doesn't know what will happen if the check doesn't come in soon.
The problems began late last year, when the Interior Department voluntarily shut down its entire computer system after a court-ordered computer hacker successfully breached the network three times. The hacker was asked to do the task by a federal judge as part of a lawsuit claiming Interior has mismanaged billions of dollars held in trust for Indian tribes.
In December, the Minerals Management Service started making its estimated payments, rather than actual payments, as a result of the computer shutdown that lasted from December to mid-March.
Mike Miller, chief financial accountant for the agency, said the computer interruption meant the agency received no accurate data regarding mineral revenues.
Because the agency doles out anywhere from $40 million to $100 million a month to participating states, MMS officials had to make estimated payments.
That, in turn, made everyone else have to estimate.
But Miller doesn't believe the estimates are that far off. He considers the shortages in the payments more a symptom of declining market prices than of making guesses.
"It looks like we have been pretty close in our estimates," Miller said. "We are looking at what has come in and giving them the same percentage of what we gave them last year."
Hiatt isn't convinced the oil, gas or mineral markets have declined that far.
"You can watch those coal trucks move down our highway every 30 seconds every day," he said. "There is no way it can go from the amount it has been to what it is now."
Hiatt said his first quarterly payments historically are $50,000 to $60,000. This year's quarterly payment was $26,000.
The federal payments are part of a complicated process that has become even more convoluted in part because of a pending lawsuit.
Utah is among 32 states across the country that receive 50 percent of the money from their federal lands that produce mineral revenues. The majority of it comes from companies extracting oil, natural gas and coal.
Those monies are disbursed by MMS.
Utah, in turn, dispenses 40 percent of its payment to the Utah Department of Transportation, which acts as a "pass-through" agency to dole it out to the counties where the revenues originated.
Kathy Starks, UDOT's fiscal analyst, said she is forced to estimate this year's percentages based on last year's numbers and is unable to give any clear answers to counties scrambling to make financial forecasts.
"They've had a hard time budgeting and being able to plan for their relative community projects," she said. "I've had a lot of calls from people trying to do their forecasts, and it is just impossible."
Starks said she'd like to get the numbers reconciled by the end of this fiscal year. If not, "It's a big mess."
Another pile of the federal money is managed by the state's Permanent Community Impact Fund Board.
It, too, makes the dollars available to local agencies through either grants or loans to pay for everything from fire stations to sewer system improvements.
Its share, for example, was $22.3 million last year. So far this year, the board has received just $11.3 million.
"We've gotten by OK, but if this keeps up we will not have enough money to address all the projects submitted from throughout the state," said Shirl Clark, the fund's manager.
Kimberley Brown Schmeling, the state's liaison in charge of managing and analyzing mineral revenues, said one saving factor in the impact board's management of its own money is that it shaved down the amount it gives out in grants, instead choosing to offer more loans.
"We're surviving on our loan repayments essentially," Schmeling said.
And until the state knows for sure what the actual federal dollars are, ledgers are full of question marks, making the whole thing an "accounting nightmare," she said.
Miller said he hopes the agency will be able to start making actual payments by July or August, but offers no promises.
Federal officials have to reconcile the records for the last seven months, making sure correct payments have been made to all the states.
The state, in turn, has to make sure its estimated payments have been correct. And it goes on and on.
"It's all projections, one on down the line to the next," Hiatt said. "You realize how much paperwork and correction it is going to take? And I'm just one little bitty fish out there. They've created a nightmare."
E-mail: amyjoi@desnews.com