The Tooele City Council kind of approved their 2022-2023 fiscal year budget during their June 15 meeting.
But because the budget includes a proposed property tax increase over the certified rate, the Council will need to hold a Truth in Taxation hearing in August before they can make the final budget and tax rate adoption.
The approved tentative budget includes over $76 million of allotted funds, more than $18 million more than last year’s budget.
The budget was presented at the meeting by Shannon Wimmer, Tooele City finance director.
The 114-page budget book highlights information about taxation, special revenue funds, water, sewer, solid waste, and stormwater, capital projects, enterprise funds, and allotted money for city departments and employees, among other information.
Sales tax is the largest source of revenue for the city and accounts for approximately 30% of the total general fund revenue, according to information in the budget. All taxable sales in Tooele City are taxed at a rate of 7%.
Property tax is the city’s second largest source of revenue, which represents 24% of total general fund revenue. Property tax is a more stable revenue source than sales tax and is distributed to school districts, municipalities, and special districts, with over 65% of property tax being allotted to public and private schools. In 2021, Tooele City received approximately 20% of property tax payments.
Utah State law maintains property tax by a process called “Truth in Taxation”.
Wimmer explained Truth in Taxation and how it is related to the tax rate.
“Government entities are required to follow a process for increasing taxes above the certified rate,” Wimmer told the Transcript. “Truth in Taxation is focused on transparency and provides opportunity for residents to provide input on the proposed increase. Truth in Taxation must be followed if an entity requires any additional tax revenue from the previous year. The certified tax rate is the rate calculated to generate the same amount of revenue that an entity budgeted the year before plus revenue from new growth. The certified tax rate does not provide any increase in revenue due to inflation, increasing costs, etcetera, without going through the Truth in Taxation process.”
The certified tax rate goes down as property values go up, allowing the city to collect the same amount of revenue each year with a small increase collected from property that was not on the tax rolls in the previous year.
The certified tax rate for Tooele City is .002009 — to be collected in December 2022, but the City Council adopted the same rate as last year, .002763, a 37.5% increase over the certified rate.
Franchise tax is collected from utilities, including natural gas, electricity, and cable TV. State law limits the amount of franchise tax for natural gas and electricity to 6%. Cable Tv is assessed a franchise tax of 5%, according to information in the budget. Last year, electricity accounted for around $1.3 million.
Parks, arts, and recreation tax is collected at 0.001% of sales tax in the city and money collected is spent on parks, recreation, and cultural facilities, like the Tooele City Arts Council and Fridays on Vine activities.
The city’s general fund, which pays for functions associated with a municipal government, like police, fire, street crews, recreation, and community development receives revenues from property, sales, licenses and permits, fees for service, grants, and transfers from other funds within the city.
In 2021, the city collected over $5 million in property tax, $8 million in sales tax, and over $1 million in licenses and permits for the general fund. The general fund is made up of 29% sales tax, 21% property tax, 16% charges for service, and 11% intergovernmental revenue, among other revenues.
The general fund pays the mayor’s salary of $86,102, City Council salaries of $12,054, and the new fire chief’s salary of $106,231, according to Wimmer.
In 2021, the police department received over $6 million to pay their employees, provide benefits, and for operating expenditures, which accounted for around 24% of the general fund. Other Tooele City employee costs can be seen on page 34 of the Tooele City budget at tooelecity.org.
Special revenue funds, according to the budget, don’t cover all costs of a particular service and include parks, arts, and recreation tax, park capital project funds, public safety capital projects funds, redevelopment agency funds, and road funds.
A capital projects fund is used to account for financial resources to be used for a acquisition, construction, or improvement of major capital assets and will include a new fire station building, which will cost $2.3 million, projects for the Tooele Aquatic Center, totaling over $250,000, and new machinery and equipment needed for Tooele City totaling around $312,000.
Enterprise funds, obtained from user fees, cover the cost of services provided including personnel, operating costs, debt service, and overhead, according to information from the budget. An enterprise fund only covers the cost of providing the service and does not make a profit. Tooele City’s enterprise funds consist of the water, sewer, and solid waste fund, storm water fund, and streetlight fund.
Overall, Tooele City’s budget is made up of 53% of revenues from the general fund and15% revenues from the water fund, along with other small percentages of funds. To view a breakdown of the whole budget, please see page 61 of the budget.
Each year preparing the budget proves a challenge. This year balancing the budget is especially a challenge because of increasing inflation.
“The biggest challenge of preparing the budget every year is balancing the needs of the city while being cognizant of the burden placed on the taxpayer,” Wimmer said. “The city is required to perform certain services for the community and the community expects a certain level of service in those and other areas. The service and amenities provided by the city contribute to the quality of life of our residents. It is a great responsibility to balance the needs of the city and the burden of taxes, especially in the current market where inflation is at an all-time high. The current market is causing our expenses to significantly increase, but is also significantly impacting the taxpayer in their everyday expenses as well. The mayor and City Council are acutely aware of the affects our increasing costs have on the taxpayer and we are working diligently to balance their responsibilities to manage the city in an efficient manner and also manage the impact that has on the residents of Tooele City.”
Each year beginning in January, Wimmer, the mayor, and the City Council begin to prepare the budget.
Although the budget is complete, the Council will meet to officially approve the budget one last time in a Truth in Taxation meeting. The law requires the budget be adopted prior to Sept. 1.