The Tooele City Council punted on a final decision for the city’s final budget and certified tax rate during its meeting Wednesday night, scheduling another budget work session for next week.
Following an 82% tax increase last year, Mayor Debbie Winn and the City Council pledged to hold the certified tax rate steady this year.
The City’s $23.2 million tentative general fund budget, approved at the City Council’s June 19 meeting, was based around the current property tax rate of .003334. The council received the certified tax rate of .003024 from Tooele County on June 15, which is 10.25% less than the previous year.
The property tax rate for taxing entities are set based on the certified tax rate, which is calculated by the Tooele County auditor using a state-issued formula and certified by the Utah State Tax Commission. The certified tax rate is designed to enable the taxing entity to collect the same amount of dollars from property as the previous year, plus income from new property added to the tax rolls.
By sticking with the higher tax rate from the 2018-19 budget, instead of the certified tax rate, the city would generate an additional $492,107 in property tax revenue in 2019-20.
“I think what turned our heads was the difference on the certified tax rate and in conjunction with a property value increase that happened,” said City Councilman Brad Pratt, during the work session prior to Wednesday’s meeting. “ … And I think because of that shock and surprise, I think we owe it to our citizens to go through this again and see if we can’t find a way to lessen that burden.”
Winn provided the City Council with a breakdown of the deficit to the approved tentative budget if they reduced the change in tax rate from 10.25% to a lesser difference, in 2% increments.
If the tax rate was only 8% higher than the certified tax rate, the deficit to the tentative budget would only be $84,091. At 6% and 4%, the gap would grow to $192,330 and $296,250, respectively.
If the City Council adopted a budget with a tax rate only 2% higher, the deficit to the tentative budget would be $396,099. Any deficit to the tentative budget’s revenue would result in cuts to its expenditures.
City Council Chairman Steve Pruden said the question once the certified tax rate was calculated was if they could lessen the impact on taxpayers.
“Is there a way that we can meet the needs that you have proposed and that these department heads deserve, but at the same time lessen the burden on the taxpayers after we hit them so hard last year,” he said.
For a resident in a $280,000 home, the City’s portion of property taxes would be $513 under the tentative budget using last year’s rate. Under the certified tax rate calculated by the county, the same homeowner would pay $466.
At a difference of 8%, that homeowner would pay $505, while at 6% the difference would be $495. At 4%, the homeowner in a $280,000 home would pay $485, while a 2% difference would be $475.
Winn said the City’s financial advisors, including an outside advisor, recommended holding the previous tax rate of .003334 to avoid having to use its fund balance.
“We have determined, as a city, with the financial advice that we have received, is that if we do not continue to maintain that rate, we’re going to have happen to us again what happened last year,” she said.
Winn also told the City Council the budget had already been trimmed during the budget process.
“There is nothing in that budget we do not need,” she said. “We are not asking for more than we need.”
During a public hearing, residents expressed concern about rising property taxes, residents living on a fixed income and questioned tax breaks for businesses.
The City Council tabled both the certified tax rate and final budget and a work meeting to discuss the budget was scheduled for Wednesday, Aug. 14 at 5 p.m. at City Hall.