A first for everything: City passed first-ever tax increase, hikes rate 50%Sep 01, 2021 03:09PM ● By Zak Sonntag
City deliberates during first ever Truth in Taxation process (Zak Sonntag/City Journals)
By Zak Sonntag | [email protected]
In August, the City of Holladay took a decisive vote to hike taxes on property owners to pay for its coveted infrastructure overhauls and help modernize an outdated revenue model whose overreliance on grant money made it vulnerable to the whims of external largesse.
The increase will rattle an additional $17 from the piggy bank of an average Holladay homeowner each month, bumping the city’s annual levy from $407 to $610 on the standard homeowner in Holladay, where the median home price is valued at $642,000.
The council’s decision caused trepidation, as asking anyone for more money is rarely a joy. Yet, ultimately, the unanimous body cast their votes without apology.
“Whether or not it’s smart politically I don’t care. I’m voting for it because we have many needs that are staring us in the face like an oncoming 18-wheeler,” said Councilmember Dan Gibbons of District 5, encapsulating the body’s argument that the decision came of necessity.
The 50% increase is a pole vault in comparison to the incremental approach of most taxing authorities. But in the eyes of the leaders, the city was painted into a corner because for years one council after the next forestalled addressing fundamental foibles in the city’s revenue model.
The council’s central pitch was that a large increase could not be avoided if the city wants to maintain its quality of life; both to keep pace with the inflationary costs of public safety as well as repair and maintain critical infrastructure. It’s a “young city, old bones,” as the saying goes, and if those bones buckle, we’ll all be worse off, the council contended.
Holladay residents mostly conceded to the logic that quality communities don’t come free. Yet residents overwhelmingly chided the size of the hike, finding 50% a rather greedy figure.
“I understand that there is a need, but 50% right out the gate is a lot. We’ve got people on fixed incomes,” resident Joseph Brooks explained to the council.
“With the economy under such uncertainty, why would you have such a big increase. Other cities are increasing rates by a fraction of this,” said Lane Richards. “In essence, it sounds like you’re trying to make up for the negligence of previous councils.”
Leaders admit that incremental tax adjustments are far more palatable and strategic than this once-in-a-generation approach. Although some representatives take umbrage at accusations of negligence.
“I am the longest serving member of this council, and I have been on councils who’ve said, ‘Not this year. Not this year.’ Remember it takes four [votes] to pass anything. There were many reasons that caused us to pause and ask, Can we get by one more year [without a tax increase]?’” said Sabrina Petersen, in her 10th year representing District 1.
For years, city leaders have quietly conceded the need and inevitability of new tax policy. But action was stalled by certain political realities—the politics of an election year, a notorious referendum debacle, and most recently a pandemic recession, whose lingering impact makes the council’s vote feel a tad insensitive, a sentiment voiced by residents who said they’re struggling enough as is trying to both pay the man and feed the fam.
“I’m struggling. I don’t want them to do fancy things and wants, just needs. I asked them to make sure they’re doing absolute needs only. I’d like to see them lower this rate,” said Holladay resident Cheryl Sanderhill, speaking during a tax policy open house at City Hall the week before the vote.
In addition to pleas to lower the rate, residents are also clambering for clarity. If this process reveals anything, it’s the perplexing dynamics of property tax law in action.
“My biggest concerns are that this issue is difficult to understand, and what you’re saying doesn’t meld with the tax bills that I’ve received, the percentages don’t match. I think as a council you need to be more transparent and do a better job of explaining this,” said Amanda Borne, during the public hearing.
The council was not shy to acknowledge how confusing they found the issue, and up to the final vote still struggled to articulate succinct responses to questions from the public. The council explained that although 50% is a stark figure, the overall impact to homeowners is significantly less, and the city’s hike will result in a total property tax increase of just 5%. This is because the City of Holladay is just one amidst a litany of other authorities with a claim to homeowner’s property tax pie—including the county, school districts, and a variety of special service districts—who inch rates up by smaller increments on a more regular basis.
The council’s vote will boost the city’s share of property tax from 10% to close to 15%.
The move comes largely in response, and with help, from the Citizen Advisory Group, a commission of local experts chartered to do a deep dive into the city’s financial and infrastructural makeup before drafting a blueprint meant to help the city maintain its strengths and remedy its weaknesses moving into the future. Last year the Group delivered its final report, “The tale of two cities,” depicting a young city with old bones in need of repair.
The report identified more than $75 million in unfunded liabilities, including a derelict storm-water system and failing roads, consistent with the findings of the Community Priorities Survey, in which Holladay residents resoundingly expressed discontent with the quality of roads and sidewalks.
The report warned the council that bold action was needed, otherwise the cost of repairs would escalate, a point emphasized by the council during the Truth in Taxation public hearing.
The group prodded the council to move forward with its “Biggest Impact” revenue model, a cost-effective, long-term plan to put the city on a fast track to financial sustainability.
“In the eyes of the committee, the math doesn’t change. If we let that infrastructure fail it’s going to cost us more in the long run, so we are strongly recommending the Biggest Impact because that’s where we get the most bang for our buck,” explained John Norton, vice chair of the group, during their 2020 presentation to the council.
The biggest impact, however, meant the biggest tax increase. The group’s advice was to levy a 92% increase, but the council drafted a compromise plan that settled with a 50% hike instead. The new revenue will flow to the general fund and give the city increased bonding power for larger projects, including a spate of road repairs already in the hopper.
The vote marks the end of a multi-year process and comes as something of a relief to leaders, who feel they went above-and-beyond to involve the public with the knowledge that it was bound to be a tough sell.
“We are required to have this hearing, and this hearing, only by law. But we as a council knew that wasn’t enough. We formed a committee, held many public hearings and open houses to get ready for this one meeting. We know many will not be happy but know that our emails and phone lines are still open to you,” Petersen said.
Despite all the effort of education and outreach, public engagement was less than anticipated, which left some officials thinking about the whims of democratic engagement.
“When you tell somebody you’re going to raise their property tax by 50%, that’s a big number, and you would expect a massive amount of public input. But we’ve been surprised the response hasn’t been more rigorous,” Mayor Rob Dahle said. “I don’t know if its apathy, or they think that it’s going to happen regardless, and it doesn’t matter if they speak out. Or maybe there is just strong enough of a general trust in the course of the council. But it does make you wonder.”