Residents began paying an additional 6 percent on their utility bills this month, but a Salt Lake City-based tax protest group is trying to ensure that it doesn't last long.
In late March, representatives from the Utah Taxpayers Association notified city officials that they were collecting signatures for a possible referendum on the newly-imposed franchise tax, which the City Council passed unanimously last month. The council says it will not allow the referendum.Council members said the 6 percent tax - which applies to franchised utilities such as US West and Mountain Fuel Supply, but not to the city's electric company - would be used to fund critical city projects. Work such as a pressurized irrigation system and curb and gutter projects cannot wait much longer, they said, and they decided to pass the tax rather than risk further bond indebtedness.
According to Howard Stephenson, Utah Taxpayers Association executive vice president, his group is protesting the tax because residents have not been given enough notification about how much taxation will be imposed, how long the tax will last and what the tax will be paying for.
"Our members in Payson have decided that they wanted the decision on the tax left up to citizens, not the council."
However, when tax association members informed city officials they were gathering signatures, the council evidently instructed City Recorder Jeanette Callaway that those signatures were not to be validated and that no referendum vote would be held.
"The city rejected the signatures and referendum on the basis of a 1987 law (Utah Code 20-11-21) that appears to prohibit citizens from holding a referendum vote on taxes imposed by cities," Stephenson said.
According to Stephenson, Payson association members are meeting with attorneys, and the group is considering taking the issue as far as the U.S. Supreme Court to get it resolved.
"We're having our attorneys look at that statute to see if it is actually unconstitutional - if the tax issue could be put on a state referendum, as it was two years ago, then why can't city residents do likewise?"
City Administrator Glen Vernon said the city is working with attorneys from the Utah League of Cities and Towns, as well as City Attorney Dave McMullin, for counsel on the statute.
"Our stand is that we will not permit a referendum vote on the issue of the franchise tax," City Administrator Glen Vernon told Stephenson during a recent council meeting.
City officials say they have made a goodwill gesture by holding a public meeting to inform citizens on the tax (during the March 7 City Council meeting), and even that was not required by law.
"We weren't required by law to hold that meeting," Mayor Richard Harmer said. "We just wanted to inform citizens what was going on, because we believe they deserve to know."
Despite imposing the franchise tax, Harmer said, the city has one of the lowest taxation rates in the state and the county. "Even with the franchise tax, that will still be true."