Tremonton officials are discussing the possibility of raising property tax rates again as they explore ways to address the challenges presented by double-digit inflation.
At last week’s council meeting, staffers presented the first draft of the annual city budget for the upcoming fiscal year, and a significant pay raise for city employees is among the largest new expenses.
The draft budget calls for a 5% raise across the board for city employees, with additional pay increases in the police and public works departments. In all, the raises would cost the city an additional $522,000 annually.
“What we’re seeing is a real competitive environment for employees, specifically public works and police,” City Manager Shawn Warnke told the council. “There are opportunities for these individuals to move elsewhere, and frankly we’d like to keep our employees.”
Warnke said the most current data from the U.S. Bureau of Labor Statistics indicate an inflation rate of 10.4% locally over the past year, and it’s important for the city to acknowledge that and do what it can to offset some of the increased cost for its employees.
To that end, he said the tentative budget includes an increase in property tax “commensurate with the increase in inflation, essentially equal to last year’s increase of about 10%.”
The city has been receiving record-high revenue from sales tax and new building permits, but state law mandates that most of that money be set aside for expenses such as general indebtedness, capital projects and infrastructure improvements.
Warnke said addressing the employee pay issue through a property tax increase makes sense, not only because sales tax and other revenue streams are mainly earmarked for other expenses, but also because those sources tend to fluctuate based on economic conditions.
Property tax revenue, he said, “is stable and something we can rely on every year.
“If we don’t increase property tax, we’ll always collect less relative to what we previously had because it doesn’t keep up with inflation.”
Some councilmembers expressed skepticism about adding another property tax increase on top of last year’s hike, which was implemented to pay for new positions within the fire department, before first exploring other options.
“Our employees are the most important thing, but the answer is not always raising taxes right off the bat,” Councilmember Lyle Vance said. “We’re gonna have to get our thinking caps on.”
Vance said employees who are being enticed by bigger paychecks in private-sector jobs might not realize that those positions often don’t come with the same level of health care and other benefits that the city provides, and pointing that out might help with retention efforts.
In any case, the city won’t be able to move forward with any specific plans for a property tax increase until the Box Elder County Auditor’s office comes up with its annual certified tax rate in the coming weeks. Once that happens and the required public hearings are held, municipalities across the county then decide whether to adopt the county rate or seek their own rates.
Mayor Lyle Holmgren reminded the council that everything remains up for discussion while the city continues to work on finalizing the budget.
“We need to be concerned about property taxes, but we have a city to run, too,” Holmgren said.