Sunday, December 16, 2018

Why I Now Support A 0.25% County Sales Tax Increase

In 2015 the county voted down Prop 1,a 0.25% county sales tax  increase ($0.01 per $4.00 purchase) that would have split the revenue between the cities, Utah County, and UTA (40%, 20%, 40%) by a 59 to 41 percent margin. In Highland the margin was 68% to 32% (click here to see the official results). I was a vocal opponent to the increase largely because of UTA allocation. I described my opposition in a post “Is Utah County Prop 1 Good or Bad for Highland?

So why the switch in attitude Mr. Mayor? Have you gone to the dark side? Good question!

At the end of the 2018 session our state legislature passed SB136 which contains nearly 6,000 lines or 222 pages – Washington DC doesn’t have much on our legislature. The bill updated prior legislation related to the county 0.25% optional sales tax, revised UTA’s management structure, and allowed the state to charge an extra fee for hybrid and electric vehicles among other things.

Now do I like SB136? Not really. For example, the restructuring of UTA is supposed to fix UTA which it very may well. However, we are being asked to trust before we verify. Also included in SB136 was significant funding to rebrand UTA to help improve the public’s perception of UTA. This has since been removed but the fact it was put in did nothing to increase the public’s faith in politicians. Here’s an idea, why don’t we improve transparency, let the newly reorganized entity function, and let then let the facts speak for themselves.

On the positive side, Utah Country has signed an interlocal agreement (click here to view it) with UTA which stipulates that the sales tax revenues UTA receives will be used to pay off debt that the county entered into to fund the Bus Rapid Transit (BRT) system now being constructed in Provo and Orem – this will take about 10 years. Once the debt is paid off then UTA must use the funds for projects that meet a service level agreement which the county and cities will help establish.

Regardless of how we feel about BRT, it is water under the bridge. Using the UTA money to pay off the debt early will save money and accelerate the funding of county road projects – nearly $9M per year more than is currently planned. This benefits everyone in the county including Highland residents. For example, I am quite sure we will need more money than was allocated in 2008 to develop the East-West Connector. The interlocal agreement will help ensure that the extra money we need will be available when we need it.

Highland is projected to receive about $200,000 a year from the sales tax. We can use this money to increase trail maintenance, and/or reduce the road fee. The funds from the new sales tax will be allocated using the standard sales tax distribution formula; 50% goes to the point of sale city and 50% goes to a shared pool which is distributed to cities based on their population. We get about twice as much sales tax revenue using this model as we would if the sales tax was distributed purely based on point of sale.

In my 2015 post on the tax, one of my arguments against it was that I felt if we rejected the 40/20/40 split we would give the legislature time to rewrite the law and pull out the part the went to UTA. Well, they did rewrite the law but left the UTA funding in and said that if the county doesn’t pass it by 2022 this transportation funding source will go away. In fact if the county doesn’t enact it by 2020 then individual cities can and the revenue would be split 50/50 between the city and UTA. It clear the legislature wants to add funding to UTA but wants counties or cities enact a tax to do so. I don’t see that changing any time soon.

Quarter Percent Sales Tax Projections Option 1: Revenue if the county enacts the tax. Option 2: Revenue if the county doesn’t but all the cities do.

I still don’t like the state’s “encouragement” but a benefit to the state asking counties to do it is that it gave our county a stronger hand in negotiating with UTA. That is why the county was able to strike a deal where we have a lot of control on how the UTA portion of this tax revenue is spent.

The state’s population is projected to double by 2065 -- see the chart below or click here to read the report, “Utah's Long-Term Demographic and Economic Projections Summary” that contains the chart. Our county will more than double and that means we do need to increase the capacity of our transportation infrastructure.

Utah Population Projections 2015-2065

Like many local issues this is not black and white. The interlocal agreement with UTA and the benefits the county and Highland get from it tip the scales for me. On Monday December 17th at 6:15 PM we will hold a special council meeting to vote on a resolution (click here to view the current draft) supporting the sales tax increase. Feel free to come and voice your opinion. You can also let the council know your thoughts by sending an email to council@highlandcity.org, or calling them individually (their number can be found here). I know this is not a lot of time but the county commissioners will voting on this issue on Tuesday (unless they continue the item). The resolution will let them know what we think about the issue.

Mayor Jenney Rees of Cedar Hills wrote an informative article on the tax that is worth reading.

Links:

No comments:

Post a Comment

Thanks for taking the time to share your thoughts regarding this post.