1. Strategic Revenue & Expenditure Discussion
Matt Leavitt, Summit County Finance Officer
Michael Howard, Summit County Auditor
Corrie Forsling, Summit County Treasurer

2. Strategic Revenue Discussion
Define: Loss of Property Tax “Purchasing Power”
Review: How Property Taxes are Calculated
Describe: Property Tax History (How We Got Here)
Recommend: Options

3. The Setting
Vibrant community that the residents perceive is growing in population and building.
Economy and workforce (and traffic) that are in reality growing.
Budget expenditures have continuously grown over time to meet the needs/demands of the community AND rising costs due to inflation.
A “minimal growth philosophy,” while desirable, has a direct impact on our ability to earn sufficient tax revenue to meet the needs of the community.
PROBLEM = Property tax revenues are not sufficient to meet cost of inflation and fulfill community needs.

4. General Fund Municipal Fund Assess & Collect Fund Transient Room Tax
Restaurant Tax
Transient Room Tax
General Fund
RAP Tax
Open Space Fund
Landfill Enterprise Fund
Fleet Lease Fund
Transit District
Service Area #8
Service Area #6

5. General Fund Municipal Fund Assess & Collect Fund Transient Room Tax
Restaurant Tax
Transient Room Tax
General Fund
RAP Tax
Open Space Fund
Landfill Enterprise Fund
Fleet Lease Fund
Transit District
Service Area #8
Service Area #6

6. Overview of County Resources
Of the twenty-one governmental funds, only three are generally considered “available for operations:”
General fund Corrections, Public Health, Library, Ambulance
Municipal services fund Public Works, Law Enforcement, Community Development and Planning
Assessing & collecting fund Costs of assessing and collecting property taxes
Elected officials cost allocated across operating funds.

7. Fund Balance History: General

8. Fund Balance History: Municipal

9. History of Resources Responsive to Changes in Economy
“Economy-Based” revenues include sales & use taxes; fees; licenses & permits.
Increase between primarily due to curbside collection fee.

10. General Fund Budget History

11. Municipal Services Budget History

12. Property Tax Revenue History

13. Purchasing Power of Property Tax Revenues
Property Taxes
Operating Funds
2004
2016
% ∆
Per Year
Gain/(Loss) of Purchasing Power
General $
7,769,204
11,028,910
3.2%
(2,967,121)
Municipal*
1,806,840
4,390,907
11.0%
(1,181,291)
Assess & Collect
2,004,287
3,153,312
4.4%
(848,340)
Combined
13,760,800
20,851,027
3.9%
(4,996,752)
*Municipal Services Fund held Truth in Taxation hearing 2013
Average CPI change from 2004 – 2016: 2.0%

14. Strategic Revenue Discussion
Define the Problem: Loss of Property Tax “Purchasing Power”
Review: How Property Taxes are Calculated
Describe: Property Tax History (How We Got Here.)
Recommend: Options

15. Property Taxes are Designed to: 1
Property Taxes are Designed to: 1. Maintain steady revenue levels for the taxing entity 2. Increase only due to New Growth 3. Ignore inflation unless adjusted through Truth-in-Taxation
“The certified tax rate provides a taxing entity with the same amount of property tax revenue it received in the previous tax year plus any revenue generated by additional growth in its tax base.”
--”Tax Rate Certification Standards of Practice,” Standard 10.2 Introduction and Overview, Utah State Tax Commission

16. Calculating Tax Rates
Property Values
Tax Rates
Property Tax Revenue

17. Property Tax Rates: No Automatic Adjustment for inflation
The current system for calculating property tax revenues does not include a factor to counter the effects of inflation.
“Taxing entities are expected to raise rates and capture inflation every five to eight years.”
Howard Stephenson, The Salt Lake Tribune, March 1, 2017, “Senate Panel Oks Property Tax Freeze to Fund Schools,” Benjamin Wood

18. Property Tax Rate History
Municipal Fund truth in taxation was 51.3% increase in calculated revenues.

19. Strategic Revenue Discussion
Define the Problem: Loss of Property Tax “Purchasing Power”
Review: How Property Taxes are Calculated
Describe: Property Tax History (How We Got Here.)
Recommend: Options

20. Property Tax Revenues from New Growth
Between 2007 – 2011, annual average revenues from new growth were $640 thousand in general fund and $92 thousand in municipal fund.
Since 2012, general fund revenues from new growth averaged $219 thousand in the general fund and $79 thousand in the municipal services fund.
A decrease of 67% and 14% respectively.

21. What New Growth Revenues Have Been Used For
Between 2007 – 2011, increased contributions to Disaster Fund and Tax Stability Fund by 11% and 16%. These fund became essential during flooding in 2010 and recession period from 2010 – 2012.
Since 2012, those “rainy day” funds have remained pretty much unchanged.

22. Property Tax Revenues: New Growth

23. Property Tax Revenues: New Growth

24. General Government Budgets and Taxes
2005 – Brown’s Canyon Road
2009 – Quinn’s Health Building + road projects

25. Impact of Truth in Taxation on the Municipal Fund (2013)
2008 – Landmark Drive

26. Reduction of Property Tax Revenues as a Percentage of Total
Total does not include Contributions from Other Funds

27. = Urgent Need for Property Tax Revenue Growth (Truth in Taxation)
The Bottom Line…
Increases in Programs & Services
Growing Budgetary Needs
Cost of Inflation & Loss of Property Tax Purchasing Power
Dependence on new growth
Most “reliable” revenue source, the foundation for building programs & services, has been eroded over time.
= Urgent Need for Property Tax Revenue Growth (Truth in Taxation)

28. Strategic Revenue Discussion
Define the Problem: Loss of Property Tax “Purchasing Power”
Review: How Property Taxes are Calculated
Describe: Property Tax History (How We Got Here.)
Recommend: Options

29. Options & Impacts: An “ala carte” menu
Do Nothing
Revenues insufficient to support increases in labor cost and health costs
No funds available for new initiatives (i.e. sustainability, mental health)
Cuts necessary to major departments (possibly public safety and health departments, as determined by the Council)
“Freeze” Property Tax Rates at Current Levels
Project revenue increase of $529 thousand per year.
Never recovering any lost purchasing power.
Increase Property Tax Rates to Recover Lost Purchasing Power
Reevaluate 5 years
Look at ways to encourage new growth or new growth strategies

30. Projecting General Government Programs & Services: Null Option

31. “At-Risk” Programs Under Null Option
General Fund:
Municipal Fund:
Corrections
Law Enforcement
Dispatch/Communications
Public Works
Public Health
Library
Sustainability
Ambulance
Any new program or expansion of services

32. Purchasing Power of Property Tax Revenues
Property Taxes
Operating Funds
2004
2016
% ∆
Per Year
Gain/(Loss) of Purchasing Power
General $
7,769,204
11,028,910
3.2%
(2,967,121)
Municipal*
1,806,840
4,390,907
11.0%
(1,181,291)
Assess & Collect
2,004,287
3,153,312
4.4%
(848,340)
Combined
13,760,800
20,851,027
3.9%
(4,996,752)
*Municipal Services Fund held Truth in Taxation hearing 2013
Average CPI change from 2004 – 2016: 2.0%

33. Recovering Purchasing Power of Property Tax Revenues
Property Taxes
Operating Funds
2016
Purchasing Power Target
2016 Tax Rate
Proposed Rate
General $
11,028,910
13,996,032
Municipal*
4,390,907
5,572,198
Assess & Collect
3,153,312
4,001,652
Combined Revenues
18,573,130
23,569,882
$15.4
$19.5
Approximate 27% increase across funds.
General fund additional revenue: $2.9 million
Municipal fund additional revenue: $1.2 million

34. Entity Truth-in-Taxation History 2004 - 2016
Wasatch County , 2010, 2004
Morgan County , 2007, 2005
Washington County – 2010, 2008, 2007
Park City Fire District – 2010, 2008, 2004
Park City Municipal – 2010
Park City School District – 2004,2005, 2006, 2012, 2014
Summit County Municipal Fund – 2013
Summit County General Fund – longer than history

35. Impact On Average Taxable Values Residential Primary
Fund
2016 Tax Rate
Estimated Tax
“Power” Rate
Dollar Change
General Fund $
232.51
294.96
62.45
Municipal Services Fund
189.69
240.77
51.08
Average taxable value for:
Residential Primary
Residential Secondary
Commercial
General Fund
$320,258
$654,304
$823,391
Municipal Services Fund
$331,634
$465,236
$665,860
General fund = $19.50 annual increase for every $100k of taxable value.
Municipal services fund = $15.40 annual increase for every $100k of taxable value.

36. Adjusting Property Tax Rates to Account for Loss of Purchasing Power

37. Change in TOTAL property taxes (estimated based on 2016 taxes charged by entity)
Property taxes charged in 2016: County’s portion = 15%
Adjusting for estimated increases: County’s portion = 15%
Estimated changes based on discussions and open houses held by Park City and South Summit School Districts.

38. Recommendation: Increase Property Tax Rates to Account for Loss of Purchasing Power & Reevaluate Every 5 Years

39. Areas of Consideration after Property Tax increase
Use
Estimated Amount ($)
Rebuild fund balances
600,000
Employee development and retention
1,020,000
Health insurance and benefits increases
1,100,000
Facility maintenance
250,000
Staffing requirements
Road maintenance
750,000
Total
4,320,000
Facility maintenance includes approximately $100k for Health Fund’s portion of new Kamas Building

40. Average Length of Service for County Employees
Year
Avg LOS
2011
14.5
2012
13.6
2013
12.8
2014
12.2
2015 11
2016
9.9
Estimated cost of replacing a salaried employee are 6-9 months salary on average.
Source: Society for Human Resource Management

41. Questions? …and Direction for County Auditor