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City Budget Struggle Time - Wants vs. Finances

Wednesday, March 21, 2012 - 11:45am
J. Reed Mackley

Utah cities' budgets are required by state law to be balanced. This is the season of the year that begins the struggle for the city councils in working on the budgets which must be completed by July 1st. City governments have various sources of income which they seek always to increase due to pressure from the citizens for more services and amenities, and city employees who always want an increase in salaries and benefits. North Ogden City Council recently had an uprising of city employees who attended a city council en mass to oppose a proposal to increase the portion of the insurance premium paid by the employee. North Ogden City has also been under pressure from a group of citizens who want trails and running paths constructed at community expense.

 

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The Council has several methods of funding which include: property taxes, sales taxes, grants, sale of permits and licenses, impact fees, service fees, traffic violation fines, and enterprise operations that include water, sewer, garbage, and storm water.
 
North Ogden City Council felt the wrath of the people during the past year when it proposed bonding the citizens for what was viewed as an extravagant public works facility. All three incumbents who were up for reelection were voted out of office as a result. However the capital improvement fund which had been appropriated for that purpose at the rate of $100,000 per year and reportedly contained $600,000 was at the disposal of the mayor who used $300,000 of it for preliminary studies etc.
 
Typically the councils will avoid the increase of tax rates which usually brings on the ire of the tax payers, but fortunately that method is not needed so long as the county continues to increase appraisal values which have the effect of increased property tax revenue. The sales tax is a large portion of total revenue. Pleasant View especially suffers from this deficiency because of their anti-business laws. North Ogden historically had a policy of being a “bedroom community” which purposely retarded business development. However, when state law changed the distribution of the sales taxes, the Council became a little more business friendly.
 
The major investment in new roads and utilities is accomplished by requiring sub-dividers to bear the expense whenever a new neighborhood is built. Of course the sub-dividers pass the cost on to the new home buyer where the cost is imbedded in the mortgage payment and not visible to the tax payer as such. In addition to the cost of building the roads and utilities, an impact fee is levied on the sub-divider as well. Impact fees do not bring public protest because the number of people being affected at a particular time is small in comparison to the number of voters.
 
The major costs of road and utility repairs are paid for by state funds, or grants which usually come with controlling strings attached.
 
The revenue from enterprise funds (Water, Sewer, Garbage, storm drain) as in the case of North Ogden’s 2010 report showed $3,271,400 expenses and $6,305,729 revenues for a profit of around three million. Since these are not actually government funds, but business profits, they can be disposed of however the Council and Mayor choose. During the past year the Mayor of North Ogden was proposing that by increasing the enterprise fees, the multimillion dollar bond for the public works complex could be retired with that money.
 
Redevelopment Agency (RDA) funds, like enterprise funds, do not really enter into the city budget accounting, as government funds parse but are handled in separate budgets - even though the funds are co-mingled with tax funds. These are really business functions controlled by government entities. In the case of the RDA, the money is regularly distributed arbitrarily for the benefit of individuals or private businesses - at the pleasure of the city in separate meetings.
 
City councils struggle on the one hand to provide all that is wanted, and on the other hand to find the funds.