Cities flush with tax funds
Many officials looking for best use of surplus money
Now strong economic times have returned to Utah, and like Gov. Jon Huntsman Jr., most city leaders are trying to figure out the best use for surplus funds.
Sales tax is the biggest revenue source for many cities and towns, and the amount of sales tax revenue collected for distribution to Utah cities jumped a whopping 15 percent during fiscal year 2006 to $415 million, said Charlie Roberts, spokesman for the Utah State Tax Commission.
Saratoga Springs enjoyed a 60 percent leap. Cabela's helped Lehi rake in 42 percent more, and Lindon was up 38 percent. State coffers bulged by an extra 10.5 percent, pulling in $1.8 billion, Roberts said.
A quirky problem arose in Provo when the windfall added an unexpected $1.7 million to the city's general fund. The cash pushed Provo's rainy day fund past the legal limit.
State law allows a city to keep a rainy day fund in its general fund as long as the balance doesn't exceed 18 percent of the general fund's estimated revenues.
Provo's rainy day fund at the end of the fiscal year in June was 25 percent of estimated revenues, about $2.5 million beyond the limit. The city spent $600,000 of the overage to boost bonuses for city employees and to upgrade carpet and other materials for the new performing arts center. Last week, the City Council approved a transfer of the remaining $1.9 million to the general capital projects fund.
"It's not been appropriated for a particular use," Stewart said. "It's a great problem to have. The controversy comes with what the council should do with it."
Stewart said Provo's surplus wasn't enough to use to pay down debt, although he added that he believes the state should use some of its surplus to do just that.
"If the economy continues like this, then I would want to have the city pay down some debt, too," Stewart said.
Every city and town has the option to charge 1 percent sales tax on purchases within its borders. The money goes to the state, which redistributes the money through a formula that takes into account population and where the sales tax was generated.
While the state collected $415 million from businesses for the 1 percent local-option sales tax, it distributed $402 million to cities, towns and counties. The difference, Roberts said, is due to the time it takes to review records for accuracy.
The boom left behind a few cities and towns, Roberts said. Vineyard's sales tax revenue was down 39 percent while Brian Head was down 9.6 percent, Tropic 6 percent and Green River 1.1 percent.
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