City Hall’s budget team in the coming weeks will ask Mayor Dana Williams and the Park City Council to consider increasing property-tax rates every other year for 15 years, an effort to shore up a municipal balance sheet that is not expected to be as robust in the coming years as it was during the boom times.
The acknowledgement came on Monday as City Manager Tom Bakaly released the first substantive information about City Hall’s budget talks, which are scheduled to begin on Thursday. It will likely create some buzz around Park City that normally does not accompany the start of the budget talks. The city manager has presented the elected officials a balanced budget totaling just less than $65.3 million.
It has been at least 20 years since City Hall raised its property-tax rate, the city manager said, citing research conducted by staffers. In that time, though, other taxing entities like the Park City School District have raised their rates, which have been reflected on property-tax bills paid by Park City residents. Park City voters have also authorized property-tax increases through ballot measures to finance open space purchases and the construction of the Quinn’s Junction ice arena.
According to the city manager’s proposal, the property-tax rate would climb by 6 percent in odd-numbered years through 2025. The increase would start in the 2011 fiscal year, which begins in July. Bakaly based the figure on inflation indicators. The city manager argued the property-tax rate does not take into account inflation. That means the buying power of the taxes collected each year has fallen over time. To keep City Hall services at the level they are now, additional municipal revenue is needed.
City Hall’s calculations show that a 6 percent increase on a primary residence assessed at $800,000 would cost the owner an additional $30 per year. The dollar amount would be a little less than $60 on a vacation home or commercial property of similar value.
The elected officials will decide whether to back the city manager’s idea for regular tax increases. Bakaly said on Tuesday he expects extensive discussions by the mayor and City Council about the proposal.
“Our hope would be people understand the long-term nature of our finances,” Bakaly said.
If the City Council endorses the idea, what is known as a truth-in-taxation hearing would be held in August. That would be in addition to the series of hearings scheduled during the budget talks.
In a report to the mayor and City Council, City Hall’s budget officer, Bret Howser, addresses the idea to increase property taxes, saying that “consistent, small property tax increases are the best solution in both the short and long term to Park City’s long-range financial issues.” Howser also said in the report that the idea to increase taxes “is not lost on staff that this is not a popular concept, and it is one which will have real impacts on some residents and businesses.”
City Hall has for years relied on growth to buoy the municipal revenues. Since the 1980s, and especially since the early 1990s, development — projects like Empire Pass, the expansion of Park City Mountain Resort’s base area and subdivisions elsewhere — has brought in big money to the city coffers. But the growth was slowing and the numbers fell sharply in the recession, leaving City Hall an expected financial reckoning.
Bakaly will ask the elected officials to cut spending at City Hall as well. He does not recommend layoffs, but wants some staffers shifted. As an example, Bakaly said, a high-level planner position would be morphed into a transportation-planning spot.
In all, approximately $400,000 would be cut from City Hall departments under Bakaly’s plan in the next fiscal year, which runs from July 1, 2010 until June 30, 2011. The city manager expects the budget cuts to have minimal impact on the public. More details about the proposed cuts will be released later.
The Thursday meeting is scheduled to start at 1:15 p.m. in the City Council’s chambers, with the budget discussion tentatively slated to start at 2:15 p.m. A hearing is scheduled sometime after 6 p.m., the first in a series of opportunities for testimony during the budget talks.