Tooele County officials appeared on the Stansbury High School stage Monday for a town hall meeting to explain their proposed tax increase and financial recovery plan to the public.
Although the number of officials on stage outnumbered the audience as the meeting started, the show went on and the audience grew to a dozen people
Tooele County Treasurer Jeremy Walker opened the meeting with a quick explanation of the county’s financial condition.
He said the county reduced services to reduce expenses, and that’s what the budget cuts over the last six months were about. The county workforce was also reduced by over 100 employees.
As a result, a cash flow crisis was avoided, Walker explained. The county’s bank balance did not reach zero before the federal government’s $3.19 million payment in lieu of taxes was received last Friday
“We have a plan and it is working,” he said.
Part of that plan, however, is an 82 percent increase in the county portion of property taxes.
Walker emphasized that the county is only raising the county general tax amount, not the entire tax bill for a piece of property.
The average value of a residence in Tooele County in 2012 was $150,000. Property taxes vary by location, and the total bill for a $150,000 home in Tooele City in 2012 was $1,148.
Only $107 of that property tax payment went to Tooele County. An 82 percent increase in the county’s portion of the property will add $88 to the average tax bill, raising the total property tax payment for the average home in Tooele City to $1,236. If implemented it will be a 7.7 percent increase in property taxes paid.
The proposed 82 percent increase in the county’s portion of property tax is for three specific purposes, Walker explained.
The $2.6 million in revenue expected to be raised by the tax hike will be used to pay back $6.5 million borrowed from other county funds to pay expenses for Deseret Peak, to build up the county’s rainy day fund, and to create a capital facilities fund.
The Deseret Peak Complex, built in 1998 before any of the current commissioners were commissioners, was never designed to break even, according to Tooele County Commissioner Jerry Hurst.
In 2011 the complex’s expenses exceeded operating revenue by $1.8 million. Final figures for 2012 are not yet available.
“That was fine back when the county received $12 million in mitigation fees that helped subsidize Deseret Peak,” said Hurst. “Now that mitigation fees have dropped to less than $4 million, we have to do things differently.”
Over the last five years, to keep Deseret Peak running, the county borrowed a total of $6.5 million from other county funds.
The borrowing of funds was legal, but the county is obligated by state law to repay those funds, according to Doug Hogan, Tooele County Attorney.
The county’s rainy day fund, or fund balance, is the net carry over from year to year. The fund balance is used to smooth over years when revenues temporarily dip or to cover large unexpected emergency expenses. The fund balance also helps with cash flow problems.
The county’s general fund balance dropped from $12.1 million in 2004 to $4.5 million in 2011.
The county also wants to create a capital facilities fund to pay for repair and remodeling of existing facilities and the replacement of aging facilities and major equipment.
The capital facilities fund will allow the county to deal with these future facility issues without the need to bond or borrow money, said Commissioner Shawn Milne.
After Walker’s presentation the first questions from the audience concerned the operation of Deseret Peak Complex.
“How did we get into so much trouble with Deseret Peak and is it going to get worse?” asked Dennis Shiner, Stansbury Park resident.
Hurst explained that the county has changed the way Deseret Peak operates. Between contracting out, reducing staff, and increasing fees, the subsidy to keep Deseret Peak open has been drastically reduced, he said.
Mike Booth, representing the Motor-Vu Drive-In in Erda, asked commissioners if they had considered the impact of the tax increase on businesses.
State law provides for a 45 percent reduction in the taxable value of a primary residence while businesses are taxed on the full assessed value of their property.
“The school district tax increase cost us almost $3,000 and we had to increase our prices,” said Booth. “Our customers are already commenting that it is cheaper to see a movie in Salt Lake. Increasing taxes seems counter productive.”
Business at the Motor-Vu decreases when there are big activities at Deseret Peak, Booth said.
“We see Deseret Peak as competition,” he said. “Having a property tax increase on us to support these facilities really hurts.”
Commissioners have two more town hall meetings scheduled. The next one is June 19 at the Convention Center at Deseret Peak Complex, and June 25 at the Grantsville High School auditorium. Both meetings start at 7 p.m.