Seeking new dollars for public safety, housing, roads and public transit, Salt Lake City expects to decide on a half-penny sales tax increase soon, possibly by April 17, and continues to seek input from residents via public forums and online surveys.
The sales tax boost, which could add $33 million in annual revenue, represents an additional nickel for every $10 spent. It would not apply to groceries or certain big-ticket purchases: automobiles, boats, RVs, modular homes and trailers. Approximately 60 percent of sales tax is paid by nonresident shoppers, commuters, tourists and other visitors.
The average sales tax in Utah is 6.6 percent and ranges from highs of 8.6 percent in Moab, 8.45 percent in Park City and 8.35 percent in Alta to a low of 5.95 percent in 38 communities. Salt Lake City’s current rate of 6.85 percent, which is the rate for all of Salt Lake County, would increase to 7.35 percent, putting it in the top 20 among 270 Utah localities.
The tax on purchases is one piece of the city’s revenue puzzle, offering a recurring source of funds for ongoing operating costs such as personnel or programs. The city also is reaching out to gauge public appetite for project-specific capital financing: It is eyeing $87 million in new borrowing, most of which would be put to road resurfacing.
That borrowing, via a voter-approved bond authorization, would likely not happen all at once but would be staggered over a number of years to match the city’s project timetable. The total impact would amount to about $5 per year property tax increase for the average homeowner, but year-to-year impact would be lower as older city debt is paid off and falls off tax bills.
The city’s four priority service needs, and their costs, break down as follows:
Streets: $20 milion annually to reverse overall declines in road conditions and fix 75 miles of roads each year. Two-thirds of the city’s 600 miles of roads are rated poor or worse. The work would be bond-financed, with another $5 million for ongoing maintenance funded by new sales tax revenue.
Housing: $5 million annually from sales tax toward carrying out the city housing master plan approved in December, including low-interest loans to affordable housing developers. The city has identified a 7,500-unit housing shortage for people who earn $20,000 or less.
Transit: $8 million annually from sales tax to improve east-west bus service; increase midday, evening and weekend service; and improve transit stops. These initiatives are part of the city’s transit master plan, also approved in December.
Public safety: $12 million annually from sales tax to hire 50 new police officers and expand community policing in 23 neighborhoods, and augment support services in dispatch, prosecution and courts.
The city has set up a website, Funding Our Future, with details on the priorities, timeline for government actions, schedules of public forums and hearings, and a survey for residents.
But as it seeks public reaction to potentially higher taxes, the city already is working from a comfortable place. Previous surveys already have shown strong support for the housing and transit plans, and road conditions and public safety are near-constant sources of resident comment and concern.
Results of an outside poll conducted for the city in early January, provided to reporters last week, showed high general approval for city government operations and low opposition to raising taxes to support priorities, by margins exceeding 2-1.
For example, 65 percent of respondents thought taxes were about right, compared with 24 percent who said they were high. Public sentiment on the $87 million borrowing was 3-1 in favor, and support for sales taxes ranged from 54 percent to 69 percent for the four priority areas. The poll of 515 respondents by Strategies 360 had a margin of error of 4.4 percentage points.
“The poll we did initially obviously shows pretty strong public support but the mayor wanted to have a robust engagement period,” said Matt Rojas, spokesman for Mayor Jackie Biskupski. Results of the new online survey, with about 700 responses so far, are “falling in with our initial poll.”
Timing for action of both measures is important. A one-month delay in approving the sales tax increase, pushing it into May, could reduce revenue from it this year by $2.7 million. City authorization on seeking voter approval for the bond has to be finalized by August for the measure to appear on the November ballot.
The second of three City Council public hearings on the spending priorities is scheduled for Tuesday’s council meeting. The 7 p.m. hearing will be preceded by an open house and a council work session discussion, starting at 5 p.m.
The council has scheduled a final public hearing and possible vote on the sales tax hike on April 17.