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Andy Larsen: How does Salt Lake City actually run its budget? I try to make it as simple as possible.

From sewers to golf courses, airports to police — where the money comes from and where it goes.

(Rick Egan | The Salt Lake Tribune) Salt Lake City Mayor Erin Mendenhall, shown in March, has proposed a budget for 2021-22.

Have you ever realized you know nothing about a topic you really should know something about?

That was my feeling as I read the excellent article by my colleague Leia Larsen (no relation, by the way) on the new Salt Lake City budget proposed by Mayor Erin Mendenhall. I’ve lived in Salt Lake City for the past 12 years — and while it was great to know about what could be coming around the corner, I realized that I didn’t really know how the budget works overall.

So wanting to fill that gap in my knowledge, I’ve been digging into the 302-page budget proposal for fiscal 2021-22, which starts July 1. I also interviewed the city’s finance director, Mary Beth Thompson, to answer the questions I had. How the money is collected and distributed isn’t wildly different than years past, so this is a pretty good summary of how it has usually worked, too. Since I spent that time trying to understand the city’s financial workings, I figured I would share it with you — in a much shorter, much easier to read format than 302 pages of numbers.

Here’s how Salt Lake City works:

Many buckets of money

The easiest way to understand the budget is by splitting it up into pieces.

The city has nine buckets of money I want you to know about. Known as funds, these buckets mostly act as separated pools of money, without much cash swapping between them.

Five of these are utility funds, which are pretty straightforward. They generally charge enough for those utilities that they’re approximately net-even enterprises. (In fact, these types of funds are also called “enterprise funds,” because they’re generally operated like a private business would be.)

• There’s the refuse fund, which collects money from garbage collection, the Salt Lake Valley Landfill, and so on. City residents are charged money to have their trash collected, and that totals about $14.5 million.

• There’s the water fund, which collects money charged to residents for the water they use. Salt Lake City’s water utility actually provides water to the city and parts of South Salt Lake, Millcreek, Cottonwood Heights, Holladay, Murray and Midvale — more than 350,000 residents in the end. It has proposed raising rates by 8%, which would mean an estimated total of $90.6 million of income.

• There’s the sewer fund. I bet you can guess what that is. It’s proposing an 18% rate increase for city residents to build a new water reclamation facility. Overall, officials estimate they’ll make $58.6 million in the fiscal year.

• There’s the stormwater fund, which gets money to run the 350 miles of drainage pipes that make sure the city doesn’t flood every time it rains. It also charges homeowners for its services, for a total of about $10.9 million.

• There’s the street lighting fund, which pays for streetlights. It charges homeowners an average of $3.73 per month for the service, which comes out to be about $4.1 million.

One more nonutility enterprise fund to know about:

• There’s the golf fund, which covers the city’s six golf courses. Officials project that they’ll raise $4.4 million in greens fees the coming fiscal year — that comes along with a $1 bump in greens fees per nine holes in July and a potential $1 additional raise beginning in January 2022. They also project to make $1.5 million on golf cart rentals, $340,000 on driving range fees, and $740,000 on retail sales. They make some additional money from golf lessons, too. Overall, it’s $10.4 million in revenue.

OK, that’s all pretty straightforward, right? It’s also relatively small money; funds that largely take care of themselves by generating their own revenue.

There also is some miscellaneous revenue to take into account. The city charges telephone companies for 911 services, for example. The city got more federal funding than usual due to various coronavirus-related packages. It also gets about $8 million from Salt Lake County’s 0.25% increase in sales tax.

Big money can be found in three other buckets: the airport, Redevelopment Agency and general funds.

Airport fund

The airport fund pays for the airports, also operating as an enterprise fund. The big money airport is obviously Salt Lake City International Airport, but the Department of Airports also manages the small Tooele Valley Airport and, in West Jordan, the South Valley Regional Airport.

The airport makes most of its money (68%) by charging airlines for its services. Officials estimate income from that will be about $158 million in 2021-22 — about $11 per passenger. Most of the rest comes from “concessions,” a catchall term for all sorts of stuff: the money the airport makes from food and retail sales at the airport, plus car rental fees and parking fees. That, the budget estimates, will be worth $74.8 million in revenue. Officials expect $19.8 million in other revenues, for a total of $252 million.

Now, the Department of Airports plans to spend about $707 million in the coming fiscal year — obviously way more than it makes. That’s because the city is still building the new airport. The majority of the difference is made up for from bonds that have been or will be issued to investors. The airport will repay those from the revenues it will make in the future.

Redevelopment Agency fund

The Redevelopment Agency’s job is to make various parts of the city better, or as it puts it, “revitalize neighborhoods and business districts to improve livability, spark economic growth, and foster authentic communities.” Essentially, the RDA chooses various districts of the city, and designates them as places that could see improvement over a given period of time (usually 20 to 25 years).

The RDA makes its income through fancy accounting. It says, “OK, right now, this part of the city isn’t as successful as it could be. So we’re going to invest some money into it. After we do that, property values will go up in this district, which will mean we will make more on property taxes than we used to.”

That difference is called “tax increment,” and some of it is funneled back into the RDA, which then can use that money to make those neighborhoods even better. The agency says these areas, on average, have seen an increase in property values that is double that of the increase of non-RDA districts.

One quirk: Utah law says that RDA tax increments have to flow back to the area where they originated. You can’t use downtown money on west- or east-side projects, essentially. So as a result, the RDA keeps track of all of its project areas relatively separate.

Here’s the list of areas and how much money will be spent on them. A map of the areas listed can be found here.

The general fund — for everything else

I’ve saved the most complicated fund for last; it’s probably the most important one, too. The general fund amasses money from a whole bunch of different sources and sends it in a whole bunch of directions. We’ll break it up into revenue and expenses. All told, the revenue for the general fund totals about $341 million; expenses come to $349 million. The difference stems from the cash reserves held by the city.

Revenue

Here’s the list of revenue sources for the general fund:

Property taxes are interesting. According to Utah law, cities can’t tax properties overall for more revenue than they got in the previous year, with the exception of new growth. So as property values have skyrocketed in the city, property tax rates have declined.

The result is that the projected $99.5 million the city expects to collect from its share of property taxes is similar to the $99.4 million it got from the current fiscal year, or the $99.3 million from the prior year.

Sales tax income, on the other hand, does usually increase year over year as the city grows, prices rise, and people buy more and more stuff. Officials did budget for a pandemic-influenced dip in 2020-21 but are back to expecting $109 million in sales tax revenue in the coming year.

The city also makes money from building licenses and other sorts of permits, around $30 million in this budget. “Franchise taxes” are taxes that Salt Lake City charges to telecommunications companies, Rocky Mountain Power, and the like, essentially as a right-of-way fee. Those are worth about $28 million.

The other sources of money are smaller and varied. The city makes about $2.7 million by charging people for parking. There are various fees and fines that it charges residents and businesses. It gets some money from the federal government, some from interest made on cash reserves, and so on.

Expenses

And here’s the tally of expenses that the general fund pays, by the city department in which they’re paid:

Let’s discuss each of these, from least amount to the most:

Economic Development houses two divisions: one that works with businesses in Salt Lake City, and the Arts Council that promotes artists and art organizations. There are 18 full-time employees in this group — 12 in the business division, and six for the arts council.

Human Resources is the H.R. department for all city employees. There are 31 employees in this department.

• The City Council office has 35 full-time employees. Beyond the elected council members, the other employees study policy, reach out to the community, and assist the council members in their duties.

• The mayor’s office has 30 full-time employees, including people who work as the mayor’s chief of staff, a director of community outreach, a director of homelessness policy and outreach, a director of communications, and so on.

The Justice Court pays the five city judges, the court supervisors, and 25 judicial assistants.

• The city attorney’s office has 68 full-time employees in four divisions: one that prosecutes criminal matters, one that runs the city’s records and elections, one that provides legal advice and assistance on civil policy and administration, and one that runs risk management — the lawyers in charge of the city’s property and liability claims.

• The Finance Department, unsurprisingly, oversees finances. From the budget described here, to payroll, to contract management, to a collections office that chases down past-due bills, the finance department controls the money. There are 72 full-time employees..

• The 911 Communications Bureau answers 911 calls. The department has 108 employees, the majority of whom are call answerers; they answered 780,000 calls in 2020.

Public Lands is a new department created in the proposed budget. It merges the parks division, golf courses, trails, the city’s 86,000 planted trees, and so forth. There are 152 full-time employees in this department, including 78 in parks and 33 in golf.

Community and Neighborhoods has a lot of jobs: housing and homelessness services, urban planning and zoning, building permits and code inspections, and transportation. There are 175 full-time employees in this department.

• You probably know what the Fire Department does. Crews fight fires, of course, but they also show up at car accidents, medical episodes, and in a wide variety of emergencies. There are 374 full-time employees in the department across 14 fire stations.

Public Services is in charge of a variety of, well, services to the public. It is in charge of street repair and maintenance, parking and parking enforcement, all of the city’s 77 facilities and all of the city’s 1,562 vehicles, and even hiring crossing guards near schools. It has 294 full-time employees.

• There’s the Police Department, which is mostly split up into an investigation bureau (167 employees) and a patrol bureau (327 employees). A total of 714 employees work for the police department; the others work in the chief’s office, in administration (think police finance and record keeping), and in a training and airport division.

• Then there’s a whole bunch of nondepartmental expenditures, ones that don’t fit into any of the buckets listed above. The biggest ones of these are transfers to other parts of government, or paying off some of the city’s debt, but the nondepartmental category also is where you see some payments to civic organizations that aren’t legally a part of city government: the city pays $675,000 to the Tracy Aviary, $160,000 to the Utah League of Cities and Towns, $30,000 to the Rape Recovery Center, and so on.

What about the library?

Salt Lake City libraries exist in kind of a weird budgetary space — they’re actually an appendix in the mayor’s budget proposal. Essentially, a certain segment of your property taxes is earmarked for libraries, without really going through the general fund accounting.

In all, this budget accounts for $22 million of tax revenue and about $2 million of other revenue (donations, lost-book fees, printer charges, federal grants, and more) that will pay expenses. Of that $24 million total, about $15 million is spent on library employees. The rest is used to buy new books, e-books, and computers; pay utilities at the libraries; pay insurance, and so on.

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Phew! The general fund does a lot — but that’s where your property taxes and sales taxes are going to, so it makes sense.

In writing this article, I obviously had to simplify. For example, the city has an information services management fund that gets money to run the city’s technology, but because it collects money from the other city departments and not directly from you, I omitted it and the other so-called internal service funds. I also omitted the capital improvement program, which works to upgrade and replace infrastructure around the city; those projects are usually reviewed in September.

But, overall, I hope that helped you understand what Salt Lake City’s budget looks like in broad strokes. The first public hearing the budget took place May 18; another is on June 1. After some debate and negotiation, the City Council can make changes to the budget, then will vote to approve the final version sometime before June 22.

And then, the city will run — and ,after this article, in ways we’re hopefully more aware of than before.

Andy Larsen is a data columnist. He is also one of The Salt Lake Tribune’s Utah Jazz beat writers. You can reach him at alarsen@sltrib.com.


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