TREMONTON -- The city council struggled for more than an hour Tuesday, trying to decide where to set the property tax rate for the coming fiscal year.
The council could have adopted the certified tax rate of 0.002634 or gone to the redemption rate of 0.002727 (a one-time rate adjustment to get what the city council believes would come in from back taxes) or somewhere in between. The council finally agreed to go between the two rates at 0.002667.
A certified tax rate is adopted when the overall tax base has gone down but operating expenses remain the same. The state allows the city to adjust its rates to raise the same amount of revenue as in the previous year.
County Auditor Tom Bennett told the city council that Tremonton is unique in calculating its rates because the city has so many redevelopment areas.
"Some values have gone down, making the rate go up to make up for the decreased value," Bennett said, adding that it will take a 3.5 percent increase over the prior property tax rate to raise the same amount of revenue as last year.
Bennett cautioned that the certified tax rate is very individualized.
"If the value of the home goes down and the tax rate goes up, some people could get caught," Bennett said.
Last fiscal year, the city received $845,727 in property taxes and another $20,000 in back taxes.
Bennett said it is most probable, using five-year averages, the city will receive another $20,000 in back taxes without using the redemption rate.
This year's projected budget had revenue from property taxes projected to be $850,000, which is higher than what the certified tax rate raises but lower than the redemption tax rate.
Councilman Lyle Holmgren moved that the city adopt the redemption tax rate, stating property taxes are only one source of city revenue. The other source is sales tax, which is expected to be down again this year.
"This year's budget was extremely bare-bones. I am not sure we can go with much less," Holmgren said.
Councilman Diana Doutre said she had a hard time raising taxes of any kind.
"I am a retail sales owner, and I have seen sales taxes go down," said Doutre.
Bennett agreed and said this is the worst possible scenario for business owners.
The council finally agreed to set the rate between the two rates, which is expected to bring in the money needed by the city.