New cities eat county tax base

Salt Lake County currently has the second-highest property tax rate after Salt Lake City. Its rate is comparable to larger cities such as West Valley and West Jordan, but is nearly double the tax rates of other suburban cities such as Draper and Murray.

But the county also does not levy utility franchise taxes as the cities do, said county auditor Sean Thomas. When those extra taxes are factored in, unincorporated residents match up with the average tax burden of city residents.

"Politically, if people want to incorporate, what can you do?" Brown said. "The expense side of the budget needs to be scrutinized closely."

One of the major expenses for unincorporated areas is the sheriff's office, which also supplies police to cities via contracts. The county tries to keep the costs for similar services equal between unincorporated and city residents, undersheriff Jeff Carr said.

But Carr added that every time a new city is created and forms its own police force, the county has to scale back to compensate for the loss of revenue.

"We've been lucky enough that we haven't had to lay anybody off," Carr said. "When you've lost a contract to do work, you don't have that revenue and you have to cut expenses on the other side."

But Horiuchi said residents should not feel the impact of annexations on their daily service because the county simply picks up the slack and dips into the municipal services fund. All of the unincorporated areas together make the largest "city" in the county, Horiuchi said, and they still expect the same quality of service delivered in neighboring cities.

Once that fund is gone, however, Horiuchi said, the county will have to look at alternatives to tighten up expenses for unincorporated areas.

Some cities are taking more responsibility, Horiuchi said, annexing residential areas to offset the large chunks of the tax base split off from the county. Holladay, for example, recently annexed an area on the city's west side that brought little commercial value to the city.

"We don't know how much that's going to cost us. We'll find out in the next year. It may be a rude awakening," said Holladay city councilman Lynn Pace. "It is not going to pay for itself; it's going to cost us money."

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