City Hall tax hike, compounded, amounts to 59 percent over time |

City Hall tax hike, compounded, amounts to 59 percent over time

City Hall’s proposed tax increases would push the rate up by 59 percent from the 2009 tax bill over the next 15 years, according to calculations provided by the municipal government, a result of the compounding nature of the idea.

The increase would not reach the 59 percent level until the end of the 15-year span of Park City Manager Tom Bakaly’s proposal, and the figure does not take into account the decreasing value of money over time.

Mayor Dana Williams and the Park City Council recently started their annual budget talks, which are expected to be the most wrenching in years as they craft a spending plan in the shaky economy.

It has been at least 20 years since City Hall raised its property-tax rate, instead relying on development and the expanding economy to fund municipal services. Bakaly’s plan, though, would shift more of City Hall’s revenue stream to property taxes, which are seen as more stable than other sources like sales taxes.

Under Bakaly’s plan, the property-tax rate would climb by 6 percent in odd-numbered years through 2025 starting in City Hall’s 2011 fiscal year, which begins in July. The city manager bases the percent increases on inflationary indicators, arguing that the buying power of City Hall’s revenues have not kept pace with inflation.

The compounding nature of the tax increase, though, has not been widely discussed through the early days of the budget talks.

"What we’re proposing is an inflationary increase," said Bret Howser, City Hall’s budget officer, adding that the figure sounds large but, "that’s the way inflation works."

City Councilors in the future would not be bound by a decision made this year about Bakaly’s 15-year blueprint. The City Councils in coming years would need to consider tax increases perhaps as frequently as every year.

Other taxing entities like the Park City School District and Summit County could also raise taxes over the course of the 15 years.

Howser has presented the plan to tourism and lodging leaders, and another City Hall official was scheduled to address Main Street leaders on Tuesday.

"They’ve said ‘I understand that.’ They’re still not happy about that," Howser said as he described the reaction from the first two groups.

If adopted by the City Council, the tax increase would cost the owner of a primary residence assessed at $800,000 an additional $30 per year at the beginning. The dollar amount would be a little less than $60 per year on a vacation home or commercial property of similar value.

The next budget hearing is scheduled on Thursday, with the elected officials scheduled to take testimony sometime after 6 p.m. in the City Council chambers at the Marsac Building. A budget discussion among the mayor, the City Council and staffers is scheduled to start at 3:30 p.m. and last nearly 2 1/2 hours.

The discussion is open to the public, but testimony normally is not taken until the hearing. Budget topics scheduled on Thursday include proposed cuts, City Hall salaries and department spending plans. The renovation of the Racquet Club is also scheduled to be discussed.

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