Mayor: City Hall tax hike would be a ‘real bitter pill’
Mayor Dana Williams and the Park City Council, faced with the toughest financial situation in years, appeared hesitant Thursday night as they debated whether to endorse the property-tax increase that has been requested as a way to balance a budget amid falling revenues.
The decision about Park City Manager Tom Bakaly’s request for a tax increase will likely be the most closely watched of the budget season, with the prospects that everyone who owns property — whether it be a house where they live, a vacation home, a commercial building or an undeveloped tract — could face a higher property-tax rate.
The City Council was not scheduled to endorse or reject the idea during the meeting, but it seemed that Bakaly will encounter opposition from some of the elected officials in the coming weeks.
Bakaly, sometimes speaking in stark terms, argued that a property-tax increase is the "best long-term solution" to City Hall’s financial situation. There has not been an increase in the property-tax rate at City Hall in at least 20 years.
During the boom years of the 1990s and the days before the recession, Park City enjoyed expanding budgets in the hot economy. But the recession cut deep into revenue streams like sales taxes and development-related monies, and the city manager argues property taxes are more stable than the other types of City Hall revenues.
In talking to Williams and the City Council, Bakaly said staffers could craft a spending plan this year without an increase in property taxes, but he sees an increase as being key to City Hall’s financial picture in future years.
He told the elected officials there will be "hard decisions" that will need to be made without a tax increase, acknowledging that City Hall revenues will not continue grow as they did in the past decade.
Williams, who does not hold a vote except in the rare instances when the City Council casts a tie vote, said it will be difficult for him to support a tax increase this year given the state of the economy. If City Hall waited another year before deciding to increase property taxes, Williams said, the economy may have improved.
In an interview after the discussion, the mayor said there are many Parkites who have lost their jobs and "our businesses are hurting." He said he and the City Council are sympathetic to the suffering.
"Just the idea of it is a real bitter pill, it seems like, for people in the community to swallow," Williams said.
Bakaly’s blueprint for a property-tax increase calls for 6 percent hikes every two years through 2025 starting in the 2011 fiscal year, which starts in June. The increase would only push up City Hall’s portion of the property-tax bill, which amounts to 14 percent of the total bill.
A City Council decision this year would apply to the 2011 fiscal year, and City Councils in the future would be required to consider the increases when they are in office.
City Hall’s calculations show that a 6 percent increase on a primary residence assessed at $800,000 would cost the owner an additional $33 per year while the owners of a vacation home would pay $52 more on a similarly assessed place. Owners of commercial property would pay another $54 on $800,000.
Williams and members of the City Council asked for more options, including the possibility of instituting a wage freeze at City Hall. The salaries at City Hall will be further discussed later, but there seems to be dissension among the City Councilors.
Cindy Matsumoto, a City Councilor and businesswoman, said she will have difficulty endorsing wage increases to the level that will be requested, saying she has cut workers’ hours at her place. But Liza Simpson, who works on Main Street, said City Hall staffers perform well and are the municipal government’s best asset. Simpson said she would prefer to cut the money spent on construction projects in order to ensure raises are funded.
The elected officials heard 30 minutes of testimony on Thursday, with some speakers saying a tax increase would not be timed well and asking whether there are additional cuts that could be made to the City Hall budget beyond those that Bakaly has already proposed.
Chuck Klingenstein, a City Councilor in the 1990s, urged Williams and the City Council to consider a philosophical decision about the budget in the post-boom era. He wondered whether Parkites want to continue to pay for the municipal services that they have grown accustomed to.
Hans Fuegi, a businessman, challenged the budget proposal, asking whether enough has been cut. He urged the mayor and the City Councilors to "act like a for-profit business."
"Have you really turned over every rock," he said, adding, "Have you really tried as hard as possible."
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