RIVERDALE -- The passage of House Bill 81 means Riverdale residents will be spared a property tax increase that could have been as much as 200 percent.
"The future is much brighter," said City Councilman Norm Searle. "Riverdale residents should be pleased."
The bill, which addresses the distribution of city and town option sales and use tax, was sponsored by Rep. Brad L. Dee, R-Washington Terrace, and Sen. Curtis S. Bramble, R-Provo. It reached the governor's desk Wednesday.
In 2006, the Legislature passed Senate Bill 35 to change the way sales tax was redistributed among cities. For Riverdale, a city with a small residential population but significant retail presence, it meant a quarter of the sales tax generated each year in the city would be redistributed to other municipalities.
"SB35 was a tough pill to swallow," said Bruce Burrows, who was elected mayor in 2002. "It changed our outlook on what we could do on a daily basis."
When SB35 took effect in 2007, city officials had to provide services to the tens of thousands of shoppers commuting through the city each day with significantly less money. It has been estimated that Riverdale's residential population of 8,400 swells to as much 60,000 during peak shopping and traffic times.
Since the 2006 legislative session, Riverdale City Administrator Larry Hansen said he was carrying a "burden" of preparing Riverdale for losing as much as one-fourth of its regular sales tax revenue. In response, Hansen and other city staff helped draft an action plan that called for employment and other cutbacks.
Burrows said following the plan led from an all-time high in number of city employees in 2005 to an all-time low now.
Hansen said it has been challenging to force himself to consider and plan for the "downside options" should the city have failed in its effort to remedy the situation. Keeping a positive service culture among the staff despite an uncertain future has likewise been challenging, he said.
In the meantime, Hansen has come to a realization "that sometimes facts are less important than political expediency to those who will make the ultimate decision. "
City officials could see their administrators were worried about the city's prospects had HB81 not passed.
"Larry could see what could happen to the ability of the city to provide critical services if the sales tax revenue was allowed to drop off," Searle said. "That was one of his worst fears."
Taking advantage of various phase-out periods and "hold harmless" provisions in the law over the years has lessened the expected decrease somewhat, but a tough economy hasn't been kind to the city's sales tax revenues.
In 2008, House Bill 172 allowed the city to begin collecting a 0.2 percent city/town sales tax to mitigate the effects of the 2006 Senate Bill 35. According to HB172, the city would have to stop collecting the 0.2 percent sales tax in 2016. This year's HB81 allows Riverdale to continue collecting the tax through 2030.
"There were certainly dark clouds on the horizon," Searle said. "I'm not sure if the people of Riverdale understand and know how important the passage of (HB81) was. Passage of House Bill 81 will provide sunshine for many years to come."
Hansen is convinced that following the plan drafted to handle the reduction in sales tax revenue will help the city sustain itself past 2030.
"HB81 helps, but it doesn't do everything," Burrows said. "We still have to be careful managing our finances."
Passage of the new bill "means the city now has some reasonable certainty of the revenues essential for the continuation of our municipal operations, especially without the threat of losing funding for important public safety services, fire and police," Hansen said.
"Otherwise, after fiscal year 2016, the city could have been faced with a decision of having to triple our property tax rate instead of having all who come and go here day by day share in the costs of the services they are provided."
HB81 provides a "safety net" that allows a little more optimism, Burrows said.
Convincing the Legislature to pass the bill was the result of many personal contacts, weekly presence during the recent legislative session, begging, and pleading, Hansen said.