Surging costs and soaring demand for services have Salt Lake City Mayor Erin Mendenhall requesting the first property tax increase in eight years for Utah’s capital.
Mendenhall asked the City Council earlier this month to up the city’s property tax rate by 4.9%, a boost that would apply only to the city’s slice of the total tax bill.
Mendenhall said in a phone interview Thursday that city departments have adapted to meet the growing needs of an urban center with a swelling population, but that capacity is tapped out.
“After this many years of doing that stretching and reaching,” Mendenhall said, “we need to grow our organization to meet these real and lasting needs that our residents have.”
If approved, property taxes for a median priced Salt Lake City home of roughly $520,000 would go up by about $130 a year.
Because the money from a tax hike would go to the general fund, Mendenhall said, it ultimately could help to pay for city initiatives like affordable housing or transportation improvements. But the priority, she said, is expanding the city’s workforce to better serve residents.
If approved, the tax bump would add nearly $4.4 million to the general fund, helping to cover the cost of 110 new employees across a variety of departments.
Rusty Cannon, president of the Utah Taxpayers Association, said his organization is still looking into the details of the proposal and why the city believes it is justified, but questioned why officials would pursue additional tax revenue when residents already are grappling with rocketing inflation.
“Raising taxes this year, even if it’s a modest amount,” Cannon said, “seems very shortsighted.”
And with Salt Lake City and other municipalities seeing a burst in revenue from sales taxes, Cannon said, he doesn’t understand why the city is vying for more money through property taxes.
“If one were to look through the budget of Salt Lake City, you could easily find many areas where they could cut back spending or eliminate spending,” he said. “We think an honest look at the entire budget would produce the savings needed to manage things with current revenue and not have to raise taxes.”
Mendenhall has said demands on the city simply have outpaced the additional revenue officials have seen from sales taxes. And the city, like its residents, has dealt with rising costs as inflation pinches pocketbooks nationwide.
“The city government,” she said, “is in no way immune from the same impacts that we feel as homeowners and renters in the city.”
Mendenhall said the city encounters higher labor costs to retain employees in a competitive job market. The mayor’s proposed budget includes base-pay raises of 3% to 4.5% for city employees, and market adjustments totaling about $2.3 million from the general fund.
The property tax proposal, Mendenhall insists, is not a response to the recent leap in inflation or a pandemic-fueled economic shake-up. It’s about addressing the long-term rise in demands on City Hall.
The mayor said it is better to absorb a relatively small increase in property taxes now than to hold off and make residents swallow a steeper rate hike in the future. She said she hopes the additional revenue will give Utah’s capital the ability to meet residents’ needs and avoid another significant jump for years.
The City Council must adopt a city budget by the end of June. If the final budget includes a higher property tax rate, the city will hold a truth-in-taxation hearing in August.