Facebook Twitter



While the city manager says his city stands to lose $137,000 in revenue if the three tax initiatives pass, a formula to limit government growth contained in one of the initiatives worries him even more.

City Manager Tom Hardy told the City Council that the formula, part of the initiative capping property taxes at 0.75 percent of fair market value, would siphon away sales tax and discourage economic development.Hardy said the initiative imposes spending limits on cities based on population and personal income growth. Those limits are figured by using a complicated formula.

Debate about the formula hinges on whether income growth will outpace population growth. In fast-growing Davis County, population growth is likely to outstrip growth of personal income, Hardy said.

The formula discourages cities from seeking additional economic growth because it contains no provision to capture revenue generated by that new growth. Additional revenue would have to be rebated back to the citizens. A 4-1 majority vote of the City Council, however, could set a new limit which would allow cities to retain the new growth revenue.

"This does not give us a fair share. Local governments will be frozen out of sales taxes," Hardy said.

There are other problems. Hardy said if user fees, like those raised by Bountiful's power department, are applied to the city's capital improvement or general funds they too will come under the initiative limits.

Outside of the formula's impact, the State Tax Commission has projected that Bountiful will lose $27,000 if the property tax roll back passes.

Hardy also discussed the other two initiatives. One would roll back the 1987 tax increase, restoring the sales, income, gasoline and cigarette taxes to 1986 levels. If the initiatives pass, Hardy said, the city stands to lose $110,000 in gasoline tax funds. That money would be cut from road repair budgets.

The third initiative, which would give a state income tax credit to parents whose children attend private schools, won't affect Bountiful, Hardy said.

Hardy's presentation was made in a volatile atmosphere as members of the council, which is split on its support for the initiatives, called for the council to remain neutral on the initiatives.

Councilwoman Barbara Holt told Hardy he had overstated the problem with the goverment-limiting formula. She said the majority vote provision would help cities keep sales taxes when warranted.

"I think we ought to maintain our neutrality (on the initiatives). Personally we can do what ever please," she said noting the issue has polarized the community.

Councilman Robert Gramoll, an initiative supporter, said that the purpose of the initiatives, more than anything, is to send a message to legislatures to stop raising taxes. He also said, if the initiatives pass, faulty parts of the law could be changed.