Summit County Council weighs imposing new taxes
May 11, 2018
The Utah State Legislature is asking counties around the state to consider imposing additional local sales taxes to fund what lawmakers say are critical transit and infrastructure projects to support transportation, according to Summit County staffers.
The County Council discussed the proposals during a work session on Wednesday. No action was taken, but elected officials spent nearly an hour going over the details of two potential sales tax increases.
The county government's ability to explore the new tax options stems from a bill Utah Gov. Gary Herbert signed into law on March 22. S.B. 136 made modifications to local option sales taxes for transportation and authorized a new sales tax for transit, according to a county staff report prepared in anticipation of Wednesday's meeting.
Changes were made to the county option transportation tax and transportation infrastructure tax, in addition to the authorization of a new 0.20 percent local option tax for transit capital and service delivery. The new tax is based on 100 percent point of sale with the revenue exclusively going to the county, the report states. The county option transportation tax has already been implemented.
The five-member body has the authority to approve the taxes without voter input. However, a referendum could be issued.
If the County Council chooses to implement the transportation infrastructure tax before July 1, the county would get to keep 100 percent of the revenues generated until June 30, 2019, totaling about $3.6 million. The municipalities would also receive a little more than $2.6 million, with Park City taking the largest chunk — $825,635.
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Beginning in July of 2019, the taxes would be distributed to cities and unincorporated areas, transit districts, and other counties across the state, according to the staff report. If the county chooses not to impose the tax by June 30, 2020, then Park City could impose it with revenues being split between the city and the transit district. The county would not be eligible for any funds.
Staff urged County Council members to make a decision on whether or not to impose the taxes before June 30 to take secure 100 percent of the revenues.
"For the past several years, counties have had the option of implementing these taxes, but a lot of counties haven't done that," said Janna Young, deputy county manager. "If counties don't implement by the June deadline, then the state could come in and tell us what to do with those monies. We have to think about the impact these increases will have on our sales tax rate, but also, what is the Legislature going to do in the future around these tax options?"
Some of the projects that staff said could be funded through the infrastructure tax are: a Silver Creek to Bitner Road connection; extension of the electric express to an Ecker Hill park-and-ride lot; and S.R. 224 bus-rapid transit lanes.
Other projects that are on staffers' radar if the new transit capital tax is imposed are: upgraded transit service to the Kamas Valley for weekend routes; transit service to Summit Park and Timberline neighborhoods; a circulator at Canyons Village at Park City Mountain Resort; and service from lower Silver Creek and Silver Summit to the Kimball Junction transit center.
"If we want to decide what projects we want to do, this is what the county is looking at doing," said Matt Leavitt, Summit County's finance director. "If the state implemented these, we probably won't get to do these projects or else they will get delayed further out. A lot of it is about controlling what we do with the sales taxes that are generated in the county."
Summit County visitors typically pay about 90 to 92 percent of the sales taxes that are generated in Park City and about 70 percent in the Snyderville Basin, Leavitt said.
"If we implement the two taxes and no other counties implement this, then Summit County will have the second highest sales tax rate in the state next to Weber County," he said.
Only 12 counties in the state have implemented all four quarters of the local option sales tax currently available for transportation and transit.
"We hear that Salt Lake and Utah counties are looking to implement this tax rate, which helps support us significantly," Leavitt said.
If approved, the taxes would be coming on the heels of other tax increases. The Council approved a 27 percent increase in 2017 for the general and municipal funds, which amounts to about a 5.5 to 7 percent hike on an average property tax bill.
Voters also overwhelming agreed to pay an additional 0.50 percent, or two pennies for every $4 spent, on normal purchases in 2016, excluding unprepared food items and gas, to fund transportation-related projects.
"We did increase property taxes to help with road projects, but as time goes on and operation costs increase, the amount we can contribute gets eroded," Leavitt said. "If the Council goes ahead and chooses to implement the sales taxes, then we can use these the first year to bank them for future costs."
Most County Council members were not immediately sold on the idea of issuing another tax increase. Councilors Glenn Wright and Doug Clyde were not at the meeting.
County Council member Roger Armstrong discussed the political pushback the Council could receive for implementing more taxes. He added, "Salt Lake County is relying on its cities to pass resolutions in support to avoid the political problem."
Armstrong said the prospect of having the second highest sales tax in the state is another disincentive as the community competes with other resort areas.
"I struggle with it for a couple of reasons," he said. "There is always a lot of talk when we increase sales taxes that it falls more heavily on the shoulders of our visitors than it does our residents. But, it does fall on the residents. Every time we talk about second homeowners bearing the brunt, but we are still bearing something as primary homeowners."
If a majority of the counties in the state don't agree to impose the taxes, Armstrong said, then Summit County's taxes will be distributed to other counties and cities.
"I would like to see who all is stepping into this before making a decision," he said.
The County Council is scheduled to revisit the matter during the May 30 meeting.