County sales tax increase to fund transportation
Jun 21, 2018 12:54PM
By Jana Klopsch
City leaders have to decide whether they should support a new sales tax for transportation funding in order for the tax to be implemented throughout Salt Lake County.
By Cassie Goff | [email protected]
A new $58 million sales tax will be implemented throughout Salt Lake County. It will be a quarter-cent tax (one cent for every $4 spent) with collection going toward transportation funding. Leaders of the cities and townships within the county had to decide whether to support this tax by June 22. Enough municipalities showed support and the tax could be implemented as early as next month.
The state legislature has been trying to impose this tax for years. In 2015, Proposition 1 was on the general election ballot. After it failed, state legislatures went to work drafting a bill. In 2018, Senate Bill (SB) 136 was passed during the general legislative session. This bill allows counties to institute a local option general sales tax to fund certain transportation needs such as parking, trails, roads, sidewalks, public transit, park and rides, bus and rail service, and traffic and pedestrian safety features.
During the 2015 election, voters had the option to vote on Proposition (Prop) 1. A quarter-cent sales tax would be implemented to fund transportation needs. The funds collected from that tax would be split: 40 percent to cities and towns, 40 percent to transit districts and 20 percent to the counties. For counties without public transportation, the split would exclude transit districts.
Out of the 29 counties in Utah, 17 included Prop 1 on their ballot, including Beaver, Box Elder, Carbon, Davis, Duchesne, Grand, Juab, Morgan, Rich, San Juan, Salt Lake, Sanpete, Sevier, Tooele, Uintah, Utah and Weber. Out of those 17 counties, 10 voted in favor of Prop 1. Salt Lake, the most populated county in the state, voted in opposition. Prop 1 failed in Salt Lake County with a 51.2 percent to 48.8 percent vote. After the election, it was widely believed by legislators and locally elected officials that corruption in the Utah Transit Authority was the primary reason Prop 1 failed.
Senate Bill 136 is a 222-page document, which amends 43 chapters of Utah Code, enacts 9 sections of Utah Code and repeals one chapter of Utah Code. The bill was sponsored by Sen. Wayne Harper and Rep. Mike Schultz. It underwent six substitutions while in session and was signed by Gov. Gary Herbert on March 22. The bill went into effect on May 8.
This bill allows all counties in the state to impose a quarter-cent sales tax for transportation funding needs. Outlined in the bill were multiple options for counties and cities wishing to impose the new sales tax.
Option 1: If a county imposes the quarter-cent sales tax before June 30, 2019, the county may keep all the funds collected during that first year to pay debt service or fund regionally significant transportation projects. By July 1, 2019, the funds collected from the tax are split, distributing 40 percent to cities and towns, 40 percent to transit districts and 20 percent to the county. (Sound familiar?) Additionally, counties may impose a new local option sales tax by July 1, 2019, for transit capital expenses and service delivery.
Option 2: If a county does not impose the quarter-cent sales tax before June 30, 2020, then cities within that county that have transit services can impose the tax with their city. At that point, cities have the option to impose the full quarter-cent tax, from which the funds collected would be distributed half to the city and half to the transit district within that county.
Option 3: If the tax is not implemented by June 30, 2022, by a county or city, it expires.
Giving counties and/or cities authority to implement new sales tax is not the only thing SB 136 does. It also increases state hotel tax, state vehicle rental tax, registration fees for hybrid and electric vehicles and alternative fuel vehicle registration fees.
A transit transportation investment fund was also created under this bill. The TTIF is a new fund with the Utah Department of Transportation for statewide transit capital projects. After July 1, 2019, funds collected from state sales tax will be transferred to this fund. The legislature may also appropriate revenue into this fund. By fiscal year 2019, $5 million is estimated to be in this fund.
SB 136 also makes significant changes to UTA. Instead of 16 part-time members on the board, UTA will have three full-time members. An additional board, the Local Advisory Board, was created with nine members. All powers and duties of the boards have been adjusted.
The Transportation Commission was included within the bill as well. The commission has been required to update criteria, proprieties, funding levels and capital developments.
“In my heart of hearts,” Harper told the South Jordan City Council on June 5, “I believe that UTA is going to turn around and become far more responsive.”
Salt Lake County
Since Salt Lake County residents voted against a sales tax in 2015, the Salt Lake County Council passed an ordinance leaving the decision to impose the quarter-cent sales tax up to the cities.
The ordinance was “enacted to provide a source of revenue to provide its residents with public transit and safe highways, and the council directs that the provisions hereof be interpreted and construed to accomplish this stated purpose.”
The quarter-cent sales and use tax upon retail sales within the county was levied under this ordinance. However, it would only go into effect once “cities, towns and metro townships representing 67 percent of the Salt Lake County population…have adopted a resolution supporting the imposition of the sales and use tax.”
This means a collective of cities and townships making up two-thirds of the county’s population must pass resolutions in support of the tax by June 22, in order for the tax to be implemented this summer. Which is exactly what happened.
With the tax being implemented, money raised for transportation funds from this sales tax will equate to around $58 million countywide.
Cities within Salt Lake County’s jurisdiction include, Alta, Bluffdale, Cottonwood Heights, Draper, Herriman, Holladay, Midvale, Millcreek, Murray, Riverton, Salt Lake, Sandy, South Jordan, South Salt Lake, Taylorsville, West Jordan and West Valley. Salt Lake County also includes the townships of Copperton, Emigration Canyon, Kearns, Magna and White City.
All the governing bodies for these municipalities have been discussing the tax and associated suggested resolution. Many city councils feel like their hands are tied.
“As cities, we are fairly handcuffed with regard to how we are able to acquire new revenue,” said Holladay Mayor Rob Dahle during their discussion. “We are at the mercy of the state for these sorts of bones and crumbs, so when they throw them to us we are well-advised to take them.”
In fact, cities were so well-advised to pass a resolution in support of the tax that the Utah League of Cities and Towns drafted and distributed a resolution where cities just had to fill in dates and names.
Council members from many different cities were hesitant to show support to the resolution because of how their constituents voted on Prop 1 in 2015.
“Two years ago when this went on the ballot, the voters turned it down,” said South Jordan Councilmember Patrick Harris. “People were campaigning against it. The county is asking cities to override residents’ votes.”
“City council members are literally being bullied into overriding the will of their voters in order to have a piece of pie that the voters already spoke against,” wrote West Jordan Councilmember Zach Jacob in a Facebook post.
Cities may get a bigger piece of that pie if they show support for the tax now. Now that the county can implement and collect this tax before July 2019, 100 percent of the funds collected from the tax go directly to the county. Since most of the transportation needs are city-specific, such as roads owned by various cities, cities would see almost all of that money back.
“The county doesn’t have any roads, so that money will be distributed to the cities,” said Cottonwood Heights City Manager John Park.
If the tax is imposed later than July 2019, the collected funds will be split: 40 percent will go to the cities, 40 percent will go to UTA and 20 percent will go to Salt Lake County. This means the cities would see less of the collected funds.
Additionally, many councils are fearful that if they don’t pass a supporting resolution now, they may not see any money coming back to their city during the first few months of collection when the tax is imposed by the county.
As of publication, six cities and three townships have passed resolutions in support of the county’s ordinance to impose the tax.
Alta passed Resolution 2018-R-3, supporting the imposition of tax in 2018, on May 9. Holladay passed Resolution 2018-18 on June 7. Midvale passed Resolution 2018-R-25 on May 15. Millcreek passed its resolution on April 23. South Jordan passed Resolution R2018-19 on June 5. Taylorsville passed Resolution No. 18-16 on June 6.
Townships Emigration Canyon, White City, Magna and Kearns have all passed resolutions in support of the county’s ordinance. Copperton is still discussing and has yet to act on a resolution.
Sandy and Draper cities proved to be the deciding factors with their support pushing past the 67 percent threshold.
Draper leaders supported the tax in a 4-1 vote on June 19 while Sandy leaders supported it 4-3 after extensive debate.
Herriman leaders discussed the suggested resolution on June 6 and will take action on June 20 during their general meeting at 7 p.m. at the Herriman City Council Chambers at 5355 West Herriman Main Street.
Murray City officials passed a resolution of support on June 5. Salt Lake City leaders reluctantly passed the resolution on June 12.
West Valley City
As the second largest city in both the county and state, all eyes were on West Valley City to see whether the council would support the tax increase. With such a large population, their support would have been a boost to reach the county’s desired 67 percent.
But majority of the city’s elected officials were not in favor of the tax. Though they supported funding for roads, it was the process they found concerning.
While Mayor Ron Bigelow, who is generally opposed to tax increases, expressed support for the tax. Unsure how the county would allocate funds, Bigelow said thought they would push their portion of the funds toward cities still growing. With West Valley City mostly built out, he said these funds “would be a significant increase towards taking care of our roads…we can’t keep up with them, they’re deteriorating.”
These deadlines “are taken with a grain of salt,” said Councilmember Steve Buhler, and that he doesn’t “like being pushed by the legislature through the county to make these decisions.”
While funding for their roads is needed, said Councilmember Lars Nordfelt, he said this wasn’t the right way to push it, especially after residents in West Valley City voted against this proposition (56 against vs. 43 for).
Travis Barton also contributed to this article.
For more information:
Prop 1: http://www.prop1utah.com/
Wasatch Front Regional Council’s summary of SB 136: https://www.breatheutah.org/images/pdfs-doc/SB136_Sub6_WFRCSummary2018March08.pdf
Salt Lake Chamber’s Summary of SB 136: https://slchamber.com/3-takeaways-from-the-2018-transportation-bill/
Salt Lake County Ordinance: http://slco.org/WorkArea/DownloadAsset.aspx?id=2147579820
Salt Lake County Council meeting: http://slco.org/WorkArea/DownloadAsset.aspx?id=2147579810
Salt Lake County Council: https://slco.org/council-agendas/
Alta Town Council: http://townofalta.com/town-government/town-council/agendas-minutes-2/
Bluffdale City Council Meetings: https
Copperton Metro Township: https://coppertonutah.org/
Draper City Council meetings: https://www.draper.ut.us/AgendaCenter/City-Council-1
Emigration Canyon Community Council: http://www.emigrationcanyon.org/
Herriman City Council meetings: https://www.herriman.org/agendas-and-minutes/
Kearns Metro Township: http://www.thekearnsmetrotownship.org/
Magna Township: http://www.magnautah.org/
Midvale Council meetings: http://www.midvalecity.org/departments/agendas-minutes
Millcreek Council meetings: https://millcreek.us/millcreek-ut/agendas-minutes/
Murray City Council meetings: https://www.murray.utah.gov/260/City-Council
Salt Lake City Public meetings: http://www.slcgov.com/planning/planning-public-meetings
South Jordan Council meetings: http://www.sjc.utah.gov/meeting-agenda-minutesarchive-center/
West Valley City Council meetings: https://www.wvc-ut.gov/105/Agendas-Minutes
White City Township: http://whitecityutah.org/