Holladay's leaders face an all-too-common dilemma. The city needs money.
In particular, the city needs money to fix its roads. If it can't find a way to fund $12 million for that purpose soon, the problem, and the cost to fix it, will expand dramatically with time.
But rather than endure the wrath of outraged citizens by raising property taxes, some city leaders want to begin imposing up to a 6 percent tax on the electric and natural gas bills paid by all city residents. Such utility taxes grace the bills of people in 135 cities in Utah. Virtually everyone has to pay, and yet few people ever object.
And yet it's a bad idea.
Utility and franchise taxes are often referred to as hidden taxes. Generally speaking, the more hidden a tax is, the less upset taxpayers become. Hence, the less heat city leaders have to endure for imposing them.
In fairness, the Holladay City Council deserves credit for being completely transparent about its intentions. Not only have city leaders, including the mayor, spoken with the media about this plan, the city has scheduled a public hearing for 6 p.m. Thursday at the Holladay city offices to hear what residents have to say.
To be clear, the city didn't have to do any of those things. In fact, that's one of the problems with utility taxes. If a city wants to raise property taxes, state law requires that it advertise this intention in newspapers, then hold a public hearing. This law, known as "truth-in-taxation," has succeeded in keeping property taxes down statewide in relation to overall growth.
But not only are utility taxes hidden in that they appear along with other items on energy bills (most customers merely pay the total without bothering to itemize the details or question where they come from), state law allows cities to impose the tax with no notice. The law does limit the levy to 6 percent, but it imposes no limits on the revenue that 6 percent can raise during times when energy costs rise.
Also, the tax affects all residents, poor and rich. At least property taxes require less money from people in smaller homes than from those in mansions.
Hidden taxes have a way of lingering forever. Need proof? Look at your next phone bill. You'll find a federal excise tax tacked on. That was started in 1898 as a way to help finance the war on Spain. We all remember the Maine, but the war ended more than a century ago. Not so the excise tax.
Nor is Holladay's utility tax likely to end once the roads are fixed and the bonds retired.