Salt Palace expansion funding explored

In the wake of legislation mandating Salt Lake City's contribution to Salt Palace expansion funding, the city and county are exploring different funding mechanisms in order to allow the city to contribute without raiding its general fund.

And after successfully avoiding Salt Lake City's fate in the Legislature, Sandy may also be asked to pony up some funds, though those discussions are yet to be had and the idea is very preliminary, County Mayor Peter Corroon said.

Any way you slice it, however, even with city contributions, the fund through which the county funnels monies for Salt Palace construction — the Tourism, Recreation, Cultural and Convention facilities (TRCC) fund — will be going into the red or at least down to zero over the next 10 years.

County Auditor Sean Thomas said the amount of projected deficit could vary according to how funding sources are collected and accounted for, noting that "some alternatives are better than others."

If Salt Lake City pays the county a portion of its innkeepers tax according to the provisions of SB211, which was passed in the waning hours of the legislative session, the county's TRCC fund would go in the hole by $2.8 million in 2010.

By contract, the fund has a projected 2005 surplus of $12 million.

Salt Lake City leaders have proposed an alternative to the innkeepers tax contribution: hiking sales tax in the downtown area, the very area that gets the most benefit from Salt Palace conventions and conferences. With certain exceptions, the tax would be raised by up to 0.12 percent — about a penny for every $10 in sales.

Downtown merchants, predictably, aren't thrilled by the proposal, and county leaders aren't totally convinced either. County Councilman Mark Crockett, for one, has said transferring the tax burden to city residents is "not OK."

Depending on the way the deal is structured, the county TRCC fund may be better or worse off with the sales tax proposal. According to county budget director Lance Brown, if the city were to issue $13.8 million in bonds on the strength of the increased sales tax, and that money were deposited directly into the Salt Palace construction account (decreasing the amount of debt service the county would have to pay), the TRCC fund would go into the hole a whopping $8 million by 2010.

If that money were instead to go into the TRCC fund itself, the fund would be close to breaking even over each of the next 10 years, with a relatively tiny deficit of $58,000 in 2010, the worst year.