You know when you’re booking an Airbnb and it adds a $200 cleaning fee and you’re not really happy about it but you pay it anyway? And then you get to the Airbnb and there’s a list of instructions waiting for you, including several about loading the dishwasher, sweeping the floors, wiping down the bathroom and taking out all the trash? And you think to yourself, “wait, aren’t I paying for this?” but you still do all the little chores so you don’t get a one-star guest review or a fine? Now imagine your city did that. You pay your property taxes – you know, to pay for the roads, the police service, the parks and the fire department – and then every month on your city bill, you get a separate charge for a “Transportation Utility Fee” or a “Parks Fee” and you think to yourself, “wait, aren’t I already paying for this?”, but you still pay the fee so you don’t get prosecuted. Well, that’s exactly what cities are doing.
When the Utah Supreme Court ruled that local government fees – such as the Transportation Utility Fee (TUF) – were legal in March 2023, the Utah Taxpayers Association warned that a Pandora’s box had been opened. Although various versions of the TUF have existed in Utah for about a decade, this ruling was an invitation to cities to consider it as a legitimate, additional source of revenue.
The Appeal
For cities, local government fees are the perfect funding source. They are not subject to Truth in Taxation laws, they can be imposed on everyone, including entities exempt from property tax, and they are often small and unnoticed by taxpayers. They provide an additional source of revenue without the requirement for a public vote or much scrutiny at all. The benefit to taxpayers, they say, is that the revenues are placed into a special account and used only for their stated purpose.
The Problems
There are several problems with the use of fees as a method of funding government:
1. Homeowners are being charged twice for the same service: once in their property taxes, and once in the fee
2. The Utah Supreme Court’s only direction for these fees was that they are to be “reasonable”. State statute lacks guardrails or limitations on how and for what fees can be implemented
3. Although an effort is made to tie the fees to the payor’s use, both the payor and the public at large benefit from the payment of the fee. A payor’s failure to pay the fee could not discontinue the service for that individual alone.
4. The fees act like a tax in that residents are obliged to pay them, but are not subject to transparency laws or proper accountability
5. The reasons which justify certain entities being exempt from property taxes could reasonably be applied to fees.
The Solution
Cities say that they need the additional revenue local government fees bring to fund essential services such as roads, parks and public safety. We would point out that cities have two very credible alternatives: raise taxes or prioritize these services in their budget. We urge the Legislature to consider a complete ban on local government fees as a funding source for cities.
The Pandora’s box is well and truly open; it’s time to close it.