May 11, 2010
The leader of a statewide tax watchdog on Monday called City Hall’s desire to raise property-tax rates every other year for the next 15 years the most outrageous tax proposal he has heard of in his 33 years monitoring government finances, predicting the idea will be scorned upon by people on both the political right and the left.
Howard Stephenson, the president of the Utah Taxpayers Association, a Salt Lake City-based nonpartisan group that closely watches tax issues, said in an interview he is unaware of another city in Utah ever considering a property-tax increase that would be as ambitious as the one Park City Manager Tom Bakaly has proposed.
“This is just outrageous. This is ‘Twilight Zone’ material,” Stephenson said. “If people aren’t outraged, then we really are in ‘The Twilight Zone.'”
He labeled the proposal a “money grab from the taxpayers” and said he expects Parkites will eventually become unhappy with the idea.
The Taxpayers Association could issue what it calls a tax alert sometime during City Hall’s budget talks, which started last week and are scheduled to run through June. If the Park City Council endorses the city manager’s proposal to increase property taxes, Stephenson said his group would issue an alert prior to there being a truth-in-taxation hearing, a meeting that City Hall would be required to hold if the tax rate is raised.
“It’s government greed. They want to heap more and more burden on the taxpayers and businesses in Park City,” Stephenson said, adding that he expects someone from his group would testify during a truth-in-taxation hearing.
Bakaly last week unveiled his budget proposal, a balanced spending plan of just less than $65.3 million. The City Council held its first budget hearing last Thursday, receiving scattered comments. There is expected to be more interest in the coming weeks, though, as more people learn of the proposal for the tax increase and as meetings covering items like City Hall’s construction projects are held.
Under the city manager’s proposal, the property-tax rate would climb by 6 percent in odd-numbered years through 2025. The increases would start in City Hall’s 2011 fiscal year, which begins in July. Bakaly bases the increase on inflation indicators, and he has said new revenues are needed to keep City Hall services as they are now. It has been at least 20 years since City Hall raised its property-tax rate, and the rate has not taken into account inflation over those years.
City Hall’s calculations show that a 6 percent increase on a primary residence assessed at $800,000 would cost an additional $30 per year, with the increase costing people with vacation homes or commercial properties a little less than $60 per year.
Bakaly argues the money that would be brought in through a tax increase would stabilize City Hall’s finances as revenues from other sources like development and sales taxes have fallen in the recession.
But Stephenson, who has started combing through City Hall’s budget proposal, said Park City leaders already enjoy what he sees as one of the highest, per capita, property-tax bases in Utah. He said a slowdown in development is not reason enough for a tax increase.
“They should be able to live within their means,” he said.
Stephenson, who is also a Republican state senator representing parts of Salt Lake County and Utah County, suggested Mayor Dana Williams and the City Council instead institute deeper cuts in the budget than Bakaly has outlined. He also said some municipal services could be privatized, with a savings of up to 50 percent from the current costs. Stephenson did not specify services that could be contracted out to the private sector.
He said Park City has a tradition of supporting the political left, but he said it will be interesting to learn whether rank-and-file Parkites will support the tax increase.
“This City Council and mayor are so out of touch with the economy, the taxpayers of the community,” Stephenson said.