New city has empty pockets

COTTONWOOD HEIGHTS — Officials starting up Salt Lake County's newest city are missing only one thing: money.

Creating a city without a dime is the scenario facing leaders in Cottonwood Heights as they brace for incorporation Jan. 14 — with no money in city coffers and a $4 million budget set for the next six months.

"This is very painful because the all-time high spending of a city coincides with the lowest revenue," said City Manager Liane Stillman. "Doing a budget is only for the brave."

Although sales tax revenues are expected to start streaming in by March, property taxes won't beef up revenues until November. By using tax anticipation loans, Stillman said the city will still be able to get up and running, allotting about $700,000 to cover one-time, start-up costs and personnel.

The biggest chunk of the budget, which was tentatively approved Tuesday, will put $1.8 million toward municipal services including a police contract with the county.

The infant city — which stretches from the Holladay border on the north to the Wasatch-Cache National Forest on the east, 1300 East on the west and Creek Road to the south — is also allotting $300,000 to start its own community and economic development office to ensure the city gets control of local zoning issues.

"Cottonwood Heights has a really solid footing financially. At the moment, it feels a little soft because of the cash flow," Stillman said.

But Stillman warns the city still has a major financial hurdle down the road as it faces a six-month shortfall in property tax revenues. Due to the different starting dates for the county and city fiscal years, Cottonwood Heights will incorporate Jan. 14 but will not begin its fiscal year until June.

That gap leaves city leaders trying to stretch 12 months of property taxes over 18 months of services.

Mayor-elect Kelvyn Cullimore Jr. originally planned to take the lapse up-front in the city's first six months, but now plans to borrow against the city's anticipated property taxes to cover start-up costs. That change, however, will merely postpone the city's $1 million shortfall until next January.

"Either way you look at it, they're short six months and they need to figure out a way to get it," said Darrin Casper, fiscal analyst for the Salt Lake County Council. "We want them to succeed, but I don't know what the answer is."