For more than 25 years, West Valley City officials have managed to run their city without any property-tax increases to help cover operating costs. The City Council is now faced with a budget proposal that would end that streak.
Acting city manager Paul Isaac on Tuesday recommended a 77 percent increase in the city's share of property taxes in his budget proposal for the 2006-07 fiscal year. The increase would mean homeowners would pay $132.84 more per year in property taxes on a home valued at $150,000. The increase would generate $7.1 million for the city.
With the proposed increase, as well as other property taxes from entities like school and water districts, West Valley residents will still have property-tax rates between 0.0148 and 0.0159, below the Salt Lake County average, Isaac said.
Calling it "a decision that five years ago we knew was coming," Isaac told the council that the increase would be needed to cover the burgeoning demand for services as West Valley — Utah's second-largest city — continues to grow at a rapid pace. Currently, the city has more than 120,000 residents.
"Without an increase in property-tax rates, not only will essential current operations and services be lost, but future operational and infrastructure needs such as personnel, equipment and materials will be inadequate to meet the demands of anticipated growth," he said.
In an interview Thursday, Mayor Dennis Nordfelt called the increase "a necessary evil," saying it is a hard decision but one that he has been pushing for over the last two years.
"It would have been, I think, less painful had we done it two years ago or even last year," he said. "Now the need to do it has increased and the amount we will need to do it percentage-wise has increased."
The city has gotten by in years past by using one-time funding, money from property sales, refinancing of debt and other temporary revenue sources to cover the shortfalls that have accompanied growth. Nordfelt praised the fiscal maneuvers of the past, but said they are not the best way to run a city from year to year.
"It's not good business to use that kind of money for day-to-day services," he said. "If you have one-time monies, you should use them for one-time purposes."
He predicted the tax increase will be a hard sell as the idea goes before the council.
Councilman Joel Coleman said Thursday that the proposal makes him a little nervous.
"It's a great burden on our taxpayers," he said. "It's a very difficult position to be in because the last thing I want to do is mandate the government takes more money out of the pockets of our citizens. At the same time I don't know quite what else to do."
Property taxes have gone up only three times in the city's nearly 26-year history. Each of those increases was instituted to cover a specific expense rather than to feed the general fund that finances the city's operating expenses. The most recent increase was in 1997, to pay for the city's fitness center.
West Valley is set to start the budget year with a projected fund balance of $2.8 million, which is only $200,000 more than the legally required minimum, Isaac said. Both Nordfelt and Coleman said the anticipated shortfall is not the fault of budget planners or the actions of elected officials current or past.
While Coleman believes there may be alternatives to a tax increase, he agrees the city's budget has been well-managed. "Nobody who knows what they're talking about can make the argument that the city is not being administered well," he said. "At the same time, I'm a citizen and I know how it feels."
The council will hash over the budget proposal in work and study sessions in the coming months. A public hearing and a possible council vote are planned for Aug. 1.
"I hope that the public will become involved in the issue, that they will become informed and then let us elected officials know what they want," Nordfelt said. "Do they want us to reduce services to keep taxes where they are, do they want us to increase taxes to keep services where they are, or do they want better services?"
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