New cities eat county tax base
Annexation, incorporation taking much-needed revenue, officials say
And a request by Cottonwood Heights for a $4 million to $7 million slice of that fund has county leaders worried unincorporated residents may be facing higher property taxes as prime commercial areas continue to be gobbled up by cities.
"We are rather frantic when it comes to this fund. We don't have the same kind of revenue generators that cities have," county councilman Randy Horiuchi said. "We do feel the tax rate has been creeping up."
Although Cottonwood Heights leaders say they cushioned the municipal services fund and now want a refund, county officials fear any sort of pay-out will only hasten a tax increase for unincorporated residents.
Even if Cottonwood Heights does not get a portion of the municipal services money, chief administrative officer Doug Willmore predicts the $21 million surplus in the fund will be gone by 2009.
That scenario has been building for some time as cities stretch their borders around retail areas, sucking the tax base out of county coffers, county budget director Lance Brown said. In the past five years, incorporations and annexations have cost the county about $20 million in sales tax dollars.
"That revenue source was just clobbered," Brown said. "All the good areas were taken."
Prime retail hubs have been siphoned into cities in recent years as Cottonwood Heights took most of the Fort Union shops and Holladay incorporated around the Cottonwood Mall.
Those boundaries have left the county with the dregs, Horiuchi said. While cities claim the tax dollars, the county is left with hard-to-service areas such as Olympus Cove near Holladay or purely residential areas that don't generate their own tax base.
"We get left holding the bag. A lot of the cities have started poaching the tax base and end up forcing us to service the areas that are left over," he said.
Lagging revenues for services such as police and public works forced the county to raise property tax rates for unincorporated residents by 40 percent in 2001. Although there have not been hikes since then, Brown said new incorporations such as Cottonwood Heights could eventually bump property taxes even higher for county residents.
Salt Lake County currently has the second-highest property tax rate after Salt Lake City. Its rate is comparable to larger cities such as West Valley and West Jordan, but is nearly double the tax rates of other suburban cities such as Draper and Murray.
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