NORTH OGDEN — It’s not every day that the government returns money to the public.
But in response to a Utah court decision last February that the sort of transportation fee North Ogden had charged residents is, in fact, a tax, city leaders plan to give residents a refund of a portion of the money collected. The city of Pleasant Grove, the target of the lawsuit that resulted in the Feb. 12 decision, has appealed, but even so, the ruling throws the legality of transportation fees into question, here and across Utah.
Don’t spend it all in one place, but the upshot of it all will be $36 credits on the utility bills of most affected North Ogden residents in December.
“I feel strongly this would be worth doing, particularly in the economic situation many of our citizens are facing today,” Mayor S. Neal Berube said late last month when the North Ogden City Council approved the plans. The COVID-19 pandemic has increased economic uncertainty, here and across the nation, putting some out of work.
The $36 per household refund reflects the $3-a-month transportation fee North Ogden billed in the 12 months before the Feb. 12 ruling from Utah County’s 4th District Court. The city stopped collecting it last March, soon after the ruling was issued. Collectively, the disbursement in North Ogden will be about $223,000, the rough amount generated by a property tax hike approved by the City Council last August. The transportation fee refund, Berube said Wednesday, is meant to offset the property tax hike.
The Libertas Institute, a nonprofit Libertarian think tank based in Lehi, filed the suit against Pleasant Grove, viewing the Utah County city’s transportation fee as an illegal funding mechanism. Fees may be approved by ordinance while new taxes face a more rigorous approval process, and in the end, Fourth District Court Judge Jared Eldridge determined that Pleasant Grove’s fee was, in fact, a tax. Fees may be assessed when those who pay them get a “specific benefit,” but Eldridge determined that guideline wasn’t applicable with the Pleasant Grove transportation fee.
North Ogden’s transportation fee was implemented in 2015, and in campaigning for mayor in 2019, when he was elected, Berube, too, questioned its legitimacy. Such fees are meant to aid in building and maintaining roads and other transportation infrastructure. “I always felt it was a tax,” Berube said.
Michael Melendez, policy director at the Libertas Institute, welcomed North Ogden’s decision. “We believe that it is good policy for cities to cease collection of the fee. Refunding past collected funds is a decision for each city to make, but we believe that many residents would appreciate a refund,” he said in an email.
Meanwhile, the two sides in the court case, the Libertas Institute and the city of Pleasant Grove, have filed their initial briefs with the Utah Court of Appeals, which is now hearing the matter. A ruling, Melendez said, should be forthcoming next spring.
If the original ruling stands, that Pleasant Grove’s transportation fee is actually a tax, the complete upshot — whether all cities with such fees have to refund the money collected — isn’t totally clear. “Right now, there’s no ruling so we have no idea,” Berube said.
Pleasant Grove, which implemented its transportation fee in April 2018, would have to pay back the funds it collected, Melendez maintains. Other cities, though, probably wouldn’t have to do so.
Twelve Utah cities in all have transportation fees and the response from each in the wake of the Fourth District Court ruling last February has varied. “Some have chosen to stop collecting because of the lawsuit, some have chosen to continue collection,” Melendez said.
Aside from those still living in North Ogden, officials plan to provide transportation fee refunds to those who lived in the city between March 2019 and March 2020 but have since moved. City staffers will have to track them down.