The difference between property taxes and user fees has become little more than a matter of semantics for a handful of Wasatch Front municipalities.
In addition to using fees in place of taxes, many cities are charging obscure, user-based taxes through entities such as electrical and phone companies.
Utah taxpayers pay slightly more than the national average when taxes only are taken into account, according to a recent report released by the Utah Taxpayers Association. But when fees are added into the equation, Utah ranks 11th highest.
"There is no question that fees are often buried," said association Vice President Royce Van Tassell. "They need to be included in the analysis ... As long as the budget remains shrouded in reams of impenetrable data, it will be easy to raise fees."
Cities charge fees on things such as business licenses, building permits, pavilion rental, animals, code enforcement and street lights. They also charge hefty impact fees on new homes and businesses.
By boosting the bottom line without raising property taxes, cities are able to skip strict hearing and document disclosure mandates. But residents may feel more informed by paying higher fees because they have a better idea where their money goes, said Utah League of Cities and Towns policy analyst Neil Abercrombie.
For the past two years Herriman has been on the front lines of the move toward user fees. The city collects a $25 monthly public safety fee and a $5 monthly parks maintenance fee from all residents, but property taxes are among the lowest in the valley, said Herriman finance director Shauna DeKorver.
A bedroom community, Herriman gets very little revenue from commercial business, DeKorver explained. That has left the City Council with a choice between boosting the property-tax rate a traditional route and finding other ways to increase funds. The council voted for the fees two years ago, and residents who were at first alarmed have gotten used to the idea, DeKorver said.
Three surveys by the League of Cities and Towns, conducted by Dan Jones & Associates in 2001, 2003 and 2005, found that more than two-thirds of Salt Lake Valley residents prefer increased user fees over increased property taxes. The polls also found that about 65 percent of residents would prefer increases on electricity and natural gas taxes rather than increases on property taxes.
According to records from the Utah State Tax Commission, 175 of Utah's 320 municipalities charge extra taxes on electricity. Almost 60 percent, a total of 187, also charge extra taxes on phone service.
Holladay recently instituted a 6 percent municipal-energy tax to pay for road repairs, which also could have been funded through a property-tax increase.
Several cities also have increased water and garbage fees, but they say the increased revenue doesn't go into the general fund so the increased fees can't be seen as an alternative to property-tax increases. However, in places like Draper and West Jordan, those fees are paying for water infrastructure. As a capital project, infrastructure improvement is often paid for through municipalities' general funds.
Several cities also have increased waste-collection fees but say the increase is a pass-through cost from providers such as Waste Management.
South Salt Lake, though, has always funded its sanitation division through property and sales taxes until now. City officials are in the midst of discussions that could add a fee for garbage pickup to free up money for parks and recreation. The city also is considering raising fees on a second garbage can to encourage recycling.
Other cities, such as Cottonwood Heights, are studying increasing fees for building permits and inspection. No changes have yet been implemented, officials there said.
Overall, according to a survey of cities by the Deseret News, most municipalities have not added or increased fees during the 2008-09 budget cycle. Rather, the cities are sticking to their consolidated fee schedules, using revenues to cover the cost of specific services.
But with continually falling sales-tax revenues and decreasing property values, next year could be a lot harder for municipalities, said Sandy spokeswoman Trina Duerkson. Increased fees plus increased taxes could be required to keep them afloat.Public hearings aren't required for municipalities to add or increase fees, but city councils are required to approve changes to their annual budgets. Most cities also list their fees and budgets online. Comparison data on all Utah municipalities can be found at tax.utah.gov.
Contributing: Cheryl Madsen and Ethan Thomas E-mail: firstname.lastname@example.org