Utah sales-tax revenue soars

PROVO — For more than 20 years, the Cedar Valley Country Store has been a last-chance gas station and a place for travelers to snag soda pop and snacks on the dusty drive between Utah County and Tooele.

It's also been the lone store in tiny Cedar Fort, generating all of the sales-tax money that helped pay the bills in a town of about 400 people.

Last year, something drastic happened. An IFA Country Store opened, and sales-tax revenue skyrocketed 70 percent, the biggest leap for a Utah city or town in 2007.

"A lot of local farmers get their feed and seed from the new store," Mayor Howard Anderson said. "We essentially doubled our commercial base, if you will. The statistics sound pretty impressive, but that's what happened."

In actual dollars, Cedar Fort's windfall — more than $16,000 is a pittance compared to the $3.5 million increase raked in by Salt Lake City. But Salt Lake's 8.9 percent growth didn't reach the statewide average of 13 percent.

The past three years have been good to most Utah cities. The post-9/11 economic slump gave way to boom times starting in 2005, and the amount of local sales and use taxes shared by cities and towns statewide has jumped from $326 million to $454 million in that time.

This year, Provo (15 percent), West Valley City (13 percent) and Orem (12 percent) all grew by more than $2 million.

"This is great news," Provo City Council Chairman George Stewart said. "This is really positive. It's a huge story for the city."

Most of this year's big sales-tax winners were in Utah County, home of eight of the 10 biggest jumps. There were some losers. Naples fell 18 percent, while South Salt Lake lost $1 million, 9 percent, and Park City dropped 8 percent.

The Naples story is truly a boom-and-bust tale. Like Cedar Fort, it has an IFA outfit. Other than that store, two cafes and a 7-Eleven, most of the sales tax is generated by gas and oil.

"2005 and 2006 were banner years for exploding oil activity and exploring for gas in the Uinta Basin," Naples Mayor Dean Baker said. "There's still lots of activity out here but not near the activity there was."

Volatility in sales-tax revenue makes planning tricky for city and town governments of all sizes. Naples, in Uintah County, collected $1.38 million in 2005, saw a 45 percent leap to $2 million in 2006 and the 18 percent drop in fiscal year 2007 to $1.64 million.

Baker said city leaders carry the largest surplus, or rainy-day fund, allowed by state law — an amount equal to 18 percent of its general-fund balance. Naples used the oil boom to develop the city park, add roads and improve irrigation, but it also added to its police force.