Property tax hike in Orem sparks action, discord

Published: Wednesday, Sept. 26 2012 8:00 p.m. MDT

Technicians Chris Adams, left, and Josh Kester work Wednesday, Aug. 1, 2012 in the Network Operations Center of Utopia.

Scott G Winterton, Deseret News

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OREM — Leslie Nelson said a $4 a month tax hike is not too much to pay to keep Orem the pleasurable town she's called home for 32 years.

City resident Wayne Burr said a recession is no time to impose a 25 percent hike on residents, particularly when one of the purposes is to pay down the debt on UTOPIA —  the oft-criticized fiber optic infrastructure network that the city is a part of.

Burr wants the tax repealed. Nelson wants the city to maintain services. And Orem city officials say misinformation about the impact of the tax and Burr's plan to repeal it is at the root of conflict.

"The thing that bothers me here is the negative feeling that is here in the city of Orem," Nelson said. "I have never seen this level of incivility in our city — ever."

At issue is an increase in property taxes — the first hike since 1978. Last month, the Orem City Council voted 6-1 to increase Orem's portion of overall property taxes 25 percent. Initially, a 50 percent hike was proposed.

The 25 percent increase startled some residents. But Jamie Davidson, Orem's assistant city manager, said the portion the city receives from each homeowner's property tax bill is 18.5 percent of the total bill, and the hike will be 25 percent of that portion. That means the tax will add about $30 a year to an average property tax bill.

"Many citizens, when they heard that property taxes were increasing 50 percent, they took their total overall tax bill and in their head added 50 percent to that," Davidson

For a home in Orem, valued at $181,000, the 25 percent increase would total approximately an additional $45 a year, Davidson said.

The city's reason for the increase is a budget shortfall of $3.3 million, the result of decreased sales tax revenue and increased expenses. A 50 percent increase would have covered that entirely, Davidson said. The 25 percent increase will generate $1.7 million. The city will adjust its budget to make up the difference, according to Davidson.

Part of that will be used to pay the city's debt obligation stemming from Orem's decision to take part in the fiber optic infrastructure network UTOPIA. The project was to be funded by user fees, but the number of users has not met expectations.

"First and foremost, the city is going to meet its obligations to its creditors," Davidson said. "Then, with the remaining funds, it is going to fund municipal operations and we anticipate municipal operations could be impacted by the fact that we may not have these additional tax monies to service and meet our operational costs."

Davidson said operational funds include items such as roads and snow removal as well as public safety, including police and fire service, and operations of the library and building services.

"Anything that we fund from general fund money could be impacted by this decision and the outcome of this referendum," he said.

Burr is pushing a referendum on the tax hike because he said the hike should be put to a vote of Orem residents. He started a petition seeking a vote and agrees it's a "hot button issue" in the city. He needs 3,129 signatures from registered voters to get the vote and Burr said he was close.

"When there's a lot of citizens hurting, it's a very poor time to raise taxes," Burr said. "That's what a lot of people we're meeting are saying. ... They don't want their taxes raised."

But Nelson said he believes the referendum petition is the result of an inaccurate view of the tax hike and what's at stake for Orem if the tax is repealed.

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