Salt Lake City OKs 12.5% tax increase with $498.2M budget. Is another increase coming?

SALT LAKE CITY — Utah’s capital city plans to move forward with a proposed property tax increase as it handles financial challenges that many others face across the state and country.

However, city leaders worry that another increase or other difficult financial decisions could be coming, with more hurdles expected this time next year.

Members of the Salt Lake City Council voted Tuesday to approve Salt Lake City’s 2027 fiscal year budget, finalizing an approximately $2.1 billion budget, when including all its entities, including Salt Lake City International Airport and the Salt Lake City School District.

The tax increase would go toward the nearly $498.2 million set aside for the general fund budget, which pays for most municipal services, like public safety, parks and roads. It comes from the 28.4% of a city resident’s property tax that the city collects, which translates to about a $9.87-per-month increase for a home valued at $624,000.

The budget includes $48 million toward the city’s capital improvement program, which pays for public infrastructure projects brought to the city by community groups.

Salt Lake City Council Chairman Alejandro Puy called it “one of the toughest budgets in a long time” shortly after the vote.

Most of the final budget, including the tax increase, didn’t change from what Salt Lake City Mayor Erin Mendenhall proposed last month. The increase is expected to generate $13.5 million toward the next budget. She also proposed over $13 million worth of cuts to help balance out a budget deficit of more than $26 million, following lost federal funds and rising costs.

Tuesday’s vote followed one last lengthy public debate over what to keep and what to cut from the budget, among some final items that were on the bubble. That came after the city learned that it received nearly $575,000 less than what was expected from new growth revenue and judgment levies.

Members agreed to cut some programs, like the Hive Pass, and put others on hiatus, like the city’s landscape exchange program. Some funding requests were trimmed, such as a reduction in hours for the Downtown Ambassadors Program, while a police drone pilot position was put on hold for an extra five months to cut costs.

The City Council also briefly entertained the idea of accepting funds from a grant the Davis County Sheriff’s Office received to add more license plate reader cameras. It’s extra funding on the city’s plate that has been paused since December over concerns about how the data collected could be shared outside the city.

Leaders ultimately opted to keep its hold on the grant while it reviews legislative changes to protect residential information.

The city will host a truth-in-taxation public hearing over the proposed tax increase on Aug. 11. It also plans to finalize how to spend the capital improvement program funds later this year.

Is another increase coming?

While city leaders appeared to breathe a sigh of relief following Tuesday’s vote, the feeling may only be temporary. City Council members feared that another tax increase could be required next year, based on projected trends, during recent budget meetings.

That didn’t change after the dust settled.

“Right now, it looks like the city is headed toward another tax increase,” Puy told KSL.

Most city employees, including police and firefighters, are represented by unions, and many salaries are slated to increase next year because of prior agreements with them. That’s on top of economic uncertainties, such as inflation and fluctuating gas prices.

The Salt Palace Convention Center will also be closed for three years starting in the fall of 2027, which is in the first half of the 2028 fiscal year. That will likely take a bite from some conventions-related tax revenue, as will any disruptions caused by construction of the new “sports, entertainment, culture and convention district” downtown.

Many of the adjustments to this year’s budget aimed to reduce future impacts with these concerns on the horizon, Puy explained.

Salt Lake City could seek new funds through other methods. Mendenhall said last month that she considered proposing adding transportation utility fees or a new tax on tickets for sporting or arts and culture events held at government-owned facilities before proposing her budget — and it appears both options are still on the table.

Yet, city leaders are bracing for potentially deeper discussions over tax increases or budget cuts, which could impact more programs or jobs.

“We’re going to have to (ask) our neighbors, are we willing to do that?” Puy said. “Are we willing to reduce the amount of services that we provide? We’re going to have to propose that to our neighbors throughout the year, and to talk about what we are willing to sacrifice.”