Salt Lake Mayor Palmer DePaulis said Gov. Norm Bangerter's six-point tax-limitation plan, which would freeze municipalities' property taxes, is a "conundrum' that does nothing to promote economic development in Utah.
Instead, the state should share with municipalities its income- and sales-tax revenues, which DePaulis called pro-growth taxes. Only then would he agree to limiting property taxes, which fund one-third of city services, he said.Bangerter's plan, announced last week and promptly labeled by Democrats as a political ploy, would freeze taxes and limit government growth, but not to the extent proposed in three tax-limitation initiatives on November's ballot.
DePaulis told reporters Thursday the plan was politically motivated and said Bangerter is responsible for inciting Utah's tax protest but is "trying to fix his problem by limiting my tax capabilities . . . That's not well thought out."
Salt Lake County commissioners have already panned the governor's proposed tax plan for similar reasons, saying limiting property taxes would hurt property-tax-dependent county government.
DePaulis said Bangerter failed to consult with him or other local government leaders who would have to deal with the plan's effects, calling the tactic "slight of hand." A Bangerter spokesperson could not be reached for comment Thursday morning.
Instead of limiting property taxes, the state should share its income and more of its sales tax with municipalities "if he (Bangerter) really wants to help us,' DePaulis said. Currently, cities and towns receive less than 1 percent of state-collected sales tax and no state income tax. Next year, the state will begin returning an extra two-sixty-fourths of a percent of the state sales tax to the city.
State income tax is constitutionally dedicated entirely to the Uniform School Fund for public education, but there are other means to expand municipalities' ability to tax, which have been consistently rejected by the Legislature.
Allowing cities to retain the taxes would stimulate economic development because as economic-development efforts pay off, taxpayers have higher income and thus pay more income tax into city coffers, DePaulis reasoned.
That way, "My check in the mail (from state government) would be based on how good an economic developer I am for my city,' the mayor said.
Bangerter criticized the County Commission for opposing his plan, which also calls for a vote of the people before property taxes could be raised, contending the commissioners want to increase taxes.
Salt Lake City is operating under a tightly crafted budget that has closed one fire station and prohibited pay raises for city employees. Although Depaulis said "we can't keep going in that direction,' he denied he would raise taxes in the future.
"The issue for me is not raising taxes, the issue is promoting growth," he said. If municipalities could share income taxes in exchange for property tax limits, there would be no need for a tax boost, he added.
"If we push for growth, we increase revenue and we don't have to raise taxes," he said.
DePaulis said the circumstances around which Bangerter unveiled his tax- limitation plan were suspiciously partisan. Bangerter announced his plan six weeks before November elections and wrote in a letter to DePaulis that the proposal had Republican leadership support.
"I thought that cast a totally partisan (shadow)" on the plan, he said.