Even with $1.5 million in revenue from a proposed new tax, the true costs of providing city-like services to unincorporated areas of Tooele County will run $85,000 short this year.
That is Zions Bank Public Finance’s final answer after studying Tooele County’s municipal services funds for four months and holding four town hall meetings.
“Municipal service expenses will exceed revenue by $1,585,000 without the municipal services tax,” said Tenille Tingey, a financial analyst with Zions Bank Public Finance. “Therefore the $1.5 million municipal services tax is necessary.”
Tingey presented Zions Bank Public Finance’s final analysis of the county’s municipal services fund to county commissioners at their June 3 meeting.
Along with the finding that the $1.5 million municipal services tax is justified, the Zions Bank Public Finance study also recommended that 25 percent of the county’s federal payment in lieu of taxes be used as revenue for the municipal services fund starting in 2015.
Bank officials also advised that municipal services expense allocations by department be reviewed annually. They also advised that future revenue streams for municipal services need to keep up with increased expenses demanded by inflation and growth.
If adopted, the municipal services tax will raise the property tax bill for a residence in unincorporated Tooele County by $41.36 per $100,000 of assessed value. Non-residential property in unincorporated Tooele County, not included in the greenbelt program, will go up by $75.20 per $100,000.
The final $1.58 million figure for the difference between municipal revenue and expenses is $455,000 higher than the $1.13 million presented in the last town hall meeting held on May 15 in Lake Point.
While calculations for the Lake Point meeting removed expenses for major collector and recreational roads from the municipal services fund, and put maintenance costs into the general fund, it kept all the state gas tax revenue in the municipal services fund.
Following the Lake Point meeting, Zions Bank analysts found 18 percent of roads were transferred to the general fund so the same percentage of state gas tax was also transferred back as revenue to the general fund resulting in the $455,000 adjustment, Tingey said.
Since the first public town hall meeting held April 17 in Rush Valley, Zions Bank has reported a difference that ranged from $2.1 million to $1.1 million between municipal services revenue and expenses.
Zions Bank officials recalculated their figures after each town hall meeting as a result of input from the public, according to Tingey.
Some changes in calculations involved subtracting expenses for roads that go to recreational areas along with major collector roads from the municipal fund budget. Zions Bank also reallocated some benefits for retired employees that were originally charged to the municipal services fund to the general fund, moved the majority of wild land fire suppression expenses into the general fund, and determined that street lights were a general fund expense item.
State code requires counties of Tooele’s size to budget expenses for municipal services from a municipal services fund. The code allows for municipal services fund revenue to include fees and charges for services and federal dollars. However, the municipal service fund cannot receive support from any fee or tax based on a countywide assessment or service.
The 2014 municipal services budget eliminated the portion of the county’s federal payment in lieu of taxes that were traditionally allocated to the municipal services fund. In 2013 the county allocated $323,000 from its $3.19 million PILT payment for municipal services.
The Zions Bank study suggested starting in 2015, the county should allocate 25 percent of PILT money to the municipal services fund.
A 25 percent allocation of the anticipated 2014 PILT payment of $3.1 million, would add $775,000 of revenue to the municipal services fund.
The recommended 25 percent distribution of PILT is based upon the destination of property tax collected by the county, according to Tingey.
With the municipal services tax in place, the county will collect a total of $6 million in property tax. Out of that $6 million, $1.5 million, which is 25 percent, will be from the municipal services tax and will go to the municipal services fund. Zions Bank recommends distributing PILT funds based on the same 25/75 split, Tingey said.
With 25 percent of total PILT funds directed to the municipal services, the municipal services tax will not need to be increased for at least five years, even when increased costs for inflation and growth are considered, Tingey said.
The municipal services tax was first proposed by the commissioners in October 2013 when they conducted their first public discussion on the 2014 budget. Two months prior, they had adopted a $2.6 million property tax increase — the first property tax increase for the county in 27 years.
The 2014 budget for Tooele County, adopted by the commissioners last December, included a municipal services tax with a revenue cap of $1.5 million.
In February 2014, the commissioners contracted with Zions Bank Public Finance for $16,500 to conduct an independent study to determine the actual costs of municipal services and to identify appropriate funding sources.
A formal public hearing will be scheduled for July before the commissioners vote on the adoption of the new tax, according to Chairman Bruce Clegg.