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The City Council adopted a 1990-91 budget Tuesday night that raises the city franchise tax from 3.7 percent to 5.36 percent and includes a 20 percent increase in sewer and water rates.

After about three hours of public and council debate, the council voted 5-2 to raise the sewer and water rates, while voting 4-3 to raise the franchise tax. Council members then voted 6-1 to adopt the final budget of $32,635,517 - an increase of $9,467,741 over 1989-90.The sewer and water rate increase is expected to bring in an additional $930,000 annually in revenues. The franchise tax increase will bring in about $600,000 more each year. The additional revenue will be used to fund capital improvement projects that the council said can wait no longer.

"These are things that we have been putting off and I feel strongly that we need to get these things done," Councilman Keith Hunt said.

All council members said they struggled with raising rates but could find no other way to take care of the city's capital improvement needs. Mayor S. Blaine Willes said the city is about five years behind schedule on its master plan projects.

With the sewer and water rate increase, the city resident's average sewer bill will increase from $10.90 to $13.08 and the average water bill will increase from $11.95 to $14.35. As the revenues from the increase are collected sewer and water projects will be completed on a priority basis.

The increase in franchise tax revenues will chiefly be used to fund a $4.5 million 10-year bond for funding street and park capital projects. About $597,000 of the increased franchise tax revenues will go toward paying back the bond and $195,000 will pay for three new positions in the public safety department and a half-time secretary in the public works department. The specific capital improvement projects will be brought back to the council for approval at a later date.

The council also decided that besides the capital projects to be funded with the rate and tax increases, the city has other pressing capital project needs. The council plans to outline those projects and bring them up for bond election this fall.

The budget also includes about a $900,000 increase in areas related to personnel costs. The city's health care premiums increased more than $230,000 and salaries increased about $480,000, or 4.6 percent. The salary increases come about because of implementation of the Hays salary system, which compares the salaries of city personnel with other cities of similar size and with the private sector.

After hearing from several parents and supporters of the Drug Abuse Resistance Education program the council decided that it would try to find a way to fund the program. Several businesses and citizens have donated money and equipment to help the program get started and the city has applied for a grant that could be used for the DARE program.

Other issues funded by the budget include $50,000 for an annual payment for five years for a new fire truck. The salary for the outdoor recreation director will now be funded through the general fund instead of through recreation fee adjustments.

About 100 citizens attended the budget hearing and most expressed opposition toward the tax increases and the increase in salaries. Howard Stephenson of the Utah Taxpayers Association said Orem is like other cities that are increasing taxes by outspending revenue growth. He said cities can solve budget issues by re-examining the way budgets are proposed.

"Rather than starting from zero, cities feel they have to build on last year's base," Stephenson said.

Several citizens voiced opposition to the increase in salaries for city personnel. One citizen said public employees are now making substantially more than those in the private sector. Another citizen said her research showed that Orem employees make on the average 10 percent more than employees at cities of similar size, contradicting the figure presented to the council by Hay Associates.