Park City may raise property tax 6 percent every other year

PARK CITY — City officials have recommended property-tax increases of 6 percent every other year until 2026 as a means of balancing the budget and granting it long-term stability.

The strategy, scheduled to begin this year, also calls for 5 percent fee increases every two years and a 4 percent fee increase for building, planning and engineering every sixth year.

"Utah cities have become much too dependent on sales tax, and that leaves Utah cities more exposed during a recession," said city budget director Brett Howser. "Eventually, we hope to get away from that."

The budget officer called the plan, which originated both from other cities' examples and extensive research, an "old idea that just hasn't been implemented."

The proposed budget recommending changes was made public at Thursday's City Council meeting, but it won't go into effect until July 1. The document could see several changes by then.

For the average homeowner in this trendy resort city, the increase could amount to about $33 per year. For second-home owners and businesses, the increase could be closer to $50 annually.

A staff report to elected officials about the tax increase explains that property taxes, unlike almost all other revenue sources, do not increase with inflation.

"Ultimately, due to the nature of property tax in Utah and the lack of an inflationary factor built into the certified property tax rate, regular property-tax increases are necessary to maintain current levels of service in the long run," it reads. "It cannot be overstressed that existing service levels are unsustainable without regular property-tax increases to make up for inflation."

More and more cities are looking at similar strategies during this recession, though the scheme is not yet common, said Utah League of Cities and Towns analyst Neil Abercrombie. In fact, the Utah Legislature has considered changing laws to allow property taxes to increase alongside inflation without special hearings.

Abercrombie, who teaches finance and budgeting at the University of Utah, explained that cities are able to operate with more autonomy under a plan like this, when money going into the city's general fund is stabilized between property tax and sales tax.

If small property-tax increases are not regularly implemented, then cities end up looking at tax increases in much larger chunks every 10 or 15 years, he said.