Residents of Salt Lake City and Sandy are looking at a possible new — and controversial — tax increase.

The tax hike, which has flown under the radar until recently, would come from the Metropolitan Water District of Salt Lake and Sandy and is raising concerns from municipal leaders and others.

One member of the Metro Water Board of Trustees went so far as to say he was "freaked out" by the increase and said the district is "in a spending frenzy."

Salt Lake City Councilman Carlton Christensen said he has "some concerns" about the increase, but "I don't think they are wasteful or that they are doing anything mischievous."

The Metro Water District board has approved a preliminary budget that includes a roughly $2.5 million tax increase for Salt Lake City and Sandy residents in the 2006 fiscal year. That would generate a 54 percent increase in the district's tax revenues. A final vote on the budget is expected June 13.

On a $200,000 home in Sandy or Salt Lake City, the increase would boost taxes by roughly $16.50 yearly.

Some representatives of the seven-member Metro Water Board say the increase is needed to pay for increased staffing and capital costs related primarily to the district's new treatment plant near Point of the Mountain.

Sandy and Salt Lake City leaders have directed Metro Water to double its capacity to meet new growth, which means increased costs. While Metro Water's reserves are $112 million this year, they will plummet to $7 million next year, and a recent study showed the district will be running in the red by 2013, Metro Water Board member Lon Richardson said.

"We haven't had (a tax increase) since 1982," Richardson said. "It would be irresponsible to let our reserves get so low. If some disaster came along, we wouldn't have enough money."

But others, including one member of the Metro Water Board, along with Sandy and Salt Lake City council members, are disputing whether the increase is really needed. Sandy has sent the board a letter opposing the increase, and Salt Lake City is considering a letter as well.

Board member Steven Newton said the district's proposed budget is full of pork. For starters, the budget looks to increase its staff by 13 or 14 more employees than are necessary, he said.

"I'm just a bit freaked out at the proposal," he said.

Metro Water's new Point of the Mountain plant is half the size of its existing Little Cottonwood facility and will only run half the time. And the Point of the Mountain facility is totally automated and can be run by operators at the Little Cottonwood facility, Newton said.