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Thursday, August 3, 2006
Good News for American Fork Taxpayers

35 is better than 50, and 20 is better than 35 -- at least when we're talking about tax increase percentages.

35 is a lot less than 50, and -- this just in -- 20 is a lot less than 35. (There's no trace of the Emperor's New Math here at the blog, thank you very much.)

Allow me to elucidate.

Several weeks ago, American Fork City officials told the dead tree media (DTM) that the City's portion of residents' property taxes could increase as much as 50 percent this year, as the City tries to climb out of the fiscal hole it dug for itself under the previous management.

Then, after much careful work by City staff and the City Council, they told us -- before and during last week's town meetings -- that the tax increase would be 35 percent, not 50 percent. That's still a lot, but it's also a lot better than 50 percent. One source attributes that improvement to higher-than-expected valuations of new growth -- which means higher revenues, since property tax is a percentage of the official valuation.

Now the happy trend continues. My favorite city councilor came home from this afternoon's work session and announced that the tax increase will likely not be 35 percent, after all. It will be more like 20 percent.

Here's what appears to have happened. According to a memo today from the City's Chief Budget Officer, Cathy Jensen, to members of the City Council, the Mayor asked her to look at the impact of having a 20 percent increase instead of the planned 35 percent. Reportedly, he is motivated by concern that some residents' property tax would go up considerably this year without the rate increase, because their property valuation has sharply increased -- an increase averaging an unexpected 22 percent citywide.

(These valuations come from the County Assessor's office, not the City. I'm not sure how they're made, but it's possible they involve eye of newt, gopher lips, and a cauldron. I have never believed them to be more than loosely connected with reality.)

Twenty percent instead of 35 would have these effects, according to the memo:

  • Revenues would decrease by $345,678. (A cute number, almost to cute to believe. 3, 4, 5, 6, 7, 8 -- what are the odds?)
  • The reserve would be substantially lower, though still within the legal range specified in state law.
  • Some major capital projects, "such as road improvements," might have to be delayed. "Possible delay" is the wording in the memo. (This is worrisome, but I guess it's okay if it doesn't become a habit -- again.)
  • The Council will have to be especially careful with expenditures during the fiscal year, and its ability to respond to unforeseen needs will be slightly reduced. (This is a calculated but reasonable risk.)

As noted, anyone whose home valuation increased sharply this year would be paying more even without the proposed rate increase. But, all things considered, a smaller rate increase will do less damage to family budgets than a larger one.

(Note that I keep using the word valuation where I instinctively want to say value. I intend to suggest by this that the two are not necessarily the same.)

In any case, I expect the Council to jump at the chance to reduce the tax increase to 20 percent. There is good reason for this, apart from their instinctive distaste for tax increases.

If we accept, as I do, that the originally planned 50 percent increase reflected City officials' best judgment at the time of what was good for the city, and that the revised 35 percent increase did the same, but in light of higher-than-expected revenues from new growth, do we now conclude that they are asking for less than they think is needed for the good of the city? Not necessarily. I am inclined to conclude that they are weighing the set of needs represented in the budget against the looming need for voter approval to spend many millions of additional dollars on a pressurized irrigation system -- and all in the light of new data about valuations.

We might say that the Council is willing to accept slightly thinner fiscal ice for a while in order to skate on slightly thicker political ice. In any case, the elephant on the rink is the pressurized irrigation bond, which will be on the ballot in November. If City officials can teach the elephant to skate by then, I will be impressed, and they will be much relieved.

I really don't know where to go from ice-skating elephants, so I believe this post has come to its end.

Jon Rodeback comments (8/4/06):

Just read your last three blog entries. Informative as always, and even mildly interesting despite my living in the East.

It might be amusing (and useful) to indicate the time when you posted an entry. The "ice-skating elephants" comment has me wondering if you wrote the last entry in the wee hours of the morning.

David Rodeback comments (8/5/06):

Thanks for the suggestion. We have the technology, but so far I don't include the time because I don't think it's important. Apparently, it's not necessary, either, if my astute readers can divine it anyway.

David Rodeback comments (8/5/06):

City officials previously had thought that the last increase in the city's property tax rate was at least 20 years ago, but one city councilor thought she remembered one more recently, in about 2002. Yesterday City Recorder Dick Colburn (a veritable fount of knowledge and resourcefulness) circulated an electronic memo confirming that there was, indeed, an 18.9 percent increase in 2002.

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