Because of the long-lasting effects of the Great Recession on City resources, competition with other priorities, and years of frugal budgeting, Salt Lake City has many unfunded critical needs. To address this, Salt Lake City considered all available financing options, and City officials determined two to be the most viable– 1) increasing the City’s portion of sales tax and 2) asking voters to consider approving a General Obligation (GO) bond. Both were enacted in 2018. This two-part funding strategy, Funding Our Future, is one of the most substantive steps in years to address the City’s Critical Needs: improved street conditions, greater housing opportunities, better transit service, and increased neighborhood safety.
Public engagement was a nearly yearlong process, February to November 2018, to educate Salt Lake City residents and businesses on the City’s critical needs (streets, housing, transit and neighborhood safety), and get input for a proposed 0.5% sales tax increase and $87 million bond for streets reconstruction. Read to learn about the original engagement process for Funding Our Future in 2018. To learn about upcoming engagement opportunities, sign up for the monthly Funding Our Future email and check back here for announcements. You can also always contact us here.
The City has many partners in addressing affordable housing: the State of Utah, Salt Lake County, the federal government, local nonprofits, and more. The City’s housing plan, Growing SLC lays out several solutions and policies to help establish Salt Lake City as a place for a growing diverse population to find housing opportunities that are safe, secure, and enrich lives and communities. For instance, Salt Lake City can work with private developers to incentivize developments with a portion of affordable housing. An example of this incentive is low interest loans, land that the City owns at deep discounts, in exchange for a development that will include a portion of affordable housing (that may not have had any affordable housing otherwise).
Funding Our Future sales tax revenue supports housing programs that help Salt Lake City residents with long term and short-term housing assistance. Funding Our Future housing programs often have more much-needed flexibility compared to other housing programs; for instance, Funding Our Future can support innovative pilot programs, like this one managed by the Road Home. This program fills a gap in transitional housing programs, which traditionally do not allow roommate situations, creating a greater strain on the already tight housing market in Salt Lake City. Learn more about Funding Our Future housing programs here.
Because of general budgeting challenges over the past several years, Salt Lake City has not spent what is needed to preserve and rebuild streets. Also, due to the City’s climate during winter, the freeze-thaw cycle worsens the street conditions. Over the past several years, the cycle has been more noticeable, and the streets are showing that wear. Learn more about the City’s street conditions here.
The City will use revenue from the 2018 Funding Our Future sales tax increase to double the lane miles maintained of City streets that are in the best condition. This will extend their life and is a complement to make sure that we are maximizing the bond money spent for streets reconstruction.
Maintenance includes activities such as crack sealing and level patching, resurfacing streets, etc. that help prolong the life of the entire street network.
Reconstruction is generally performed when a street has deteriorated to the point of no return, often requiring the street to be excavated and rebuilt from the bottom up using layers of rock and asphalt.
The bond amount is $87 million over ten years. $87 million was chosen for the streets reconstruction bond because City leaders wanted to find the greatest balance between addressing our streets reconstruction need and limiting the cost to City residents. Most likely, the $87 million will be issued in three to four bonds over the coming years. Salt Lake City sold the first $20-million installment of the bond in October 2019. This will allow the City’s Engineering Division to plan for the number of projects that can be accomplished in required three-year phases and minimize the financial impact on residents.
The City uses funding from the Capital Improvements Program (CIP) fund and General Fund to support projects like street reconstruction. However, the amount needed to “catch up” in reconstructing Salt Lake City’s streets far outnumbers the amount that would be available in the CIP or General Fund at any given time. If the City were to try to complete these street projects using the CIP and General Fund, it would take far longer and therefore result in higher long-term costs. Similarly, saving the amount required for these major reconstruction projects using sales tax funding would take decades and would ultimately be more expensive due to rising construction and material costs. A General Obligation Bond allows for a more equitable distribution of costs (paid by all property owners, existing and future) and because the City has a AAA bond rating (highest available), it is a more affordable and responsible way for the City to fund large infrastructure projects.
There are great funding needs in the areas of transit and transportation – not only in Salt Lake City but across Salt Lake County. Salt Lake County’s sales tax revenue is commonly referred to as “the 4th Quarter” – Fourth Quarter of One Percent Sales Tax known as the Regional Transportation Choice Fund. The County allocates the Transportation Choice Fund through competitive grants. While Salt Lake County’s revenue will address regional roads and transit, the critical needs to rebuild Salt Lake City’s most traveled streets as well as continue to expand transit are still larger than available funds. For street reconstruction, Salt Lake City’s General Obligation Bond remains the preferred funding choice for addressing large infrastructure needs because it generates a meaningful amount of funds, provides accountability to residents, and is the least expensive form of government financing. Having new sources of revenue–whether from the County sales tax or other sources–are all necessary for projects that contribute to quality of life in our region.
The City Council and Administration originally agreed on an 80/20 split to ensure that funds are applied to both the major most-traveled streets (arterials, or high-capacity urban streets, such as 300 West) and smaller local streets (that carry less traffic and have fewer lanes, such as Kensington Avenue) in each of the City’s seven Council Districts. The cost of reconstructing the larger arterial roads is more expensive so it will require a larger percentage of funds.
The City has a bond rating of AAA, which is the highest rating available. This means that the City has a great history of managing debt responsibly and has extremely strong creditworthiness. Having a high bond rating is like having a high credit score and greatly influences interest rates and bond pricing.
Sidewalk repair is funded through the Capital Improvements Program (CIP) and is not included as part of the streets reconstruction bond projects. Streets reconstruction is defined as curb-to-curb. When the Roadway Selection Committee is evaluating streets for reconstruction, the condition of the associated curb and gutter will be reviewed in addition to other existing projects, including any stormwater or utility repair that are planned on or near a street.
The City’s worst streets have been identified by a comprehensive City-wide pavement study conducted in 2017. City leaders decided, using results from this study, to apply funds in an 80/20 split – meaning 80 percent of funding would go to major arterial streets that residents use most and 20 percent would be spent on local neighborhood streets.
The prioritization of these streets will be conducted by the City’s Engineering Division and the Roadway Selection Committee using the following criteria (in no specific order):
Bond funding can only be spent on streets reconstruction projects. The goal is to fund the reconstruction of the worst streets first, allowing the City to take a more proactive approach to improving the overall quality of City streets.
The first GO bond-funded streets reconstruction projects began design in 2019 and will begin construction in 2020: 500 East (from 1700 South – 2100 South), 2000 East (from Parley’s Way – City Limits) 700 West (from 1600 South – 2100 South) and 900 East (from Hollywood Drive – 2700 South). Learn more here.
The Capital Improvement Program (CIP) is a multi-year plan of Salt Lake City’s large project and equipment purchases that are typically over $50,000 each. The CIP Fund pays for big projects like new park amenities, public building upgrades, improvements to the public right-of-way aka “sidewalk to sidewalk” projects, and current debt service (payments on bonds, like the GO Bond for streets reconstruction). The City sets aside approximately 7% of all funding, including Funding Our Future to CIP. Additional funding from the specific area plans has also been budgeted for specific CIP needs. Each year, the City Council appropriates the overall funding available for the Capital Improvement Program and approves debt payments as part of the annual budget in June. Over the summer, the City Council reviews individual projects and per state law must approve project specific funding by September 1. CIP is an open and competitive process where residents, local organizations and City departments submit project applications. The Community Development and Capital Improvement Program (CDCIP) resident advisory Board reviews the applications in public meetings and makes funding recommendations to the Mayor and City Council. The Mayor provides a second set of funding recommendations to the Council which ultimately decides projects specific funding. One of City Council’s policy goals is to allocate more funding for CIP projects. In fiscal year 2019-2020, more money went into CIP from Funding Our Future for improvements to the right-of-way (curbs, gutters, streets, etc.) but that might not happen every year.
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As one of the top concerns of Salt Lake City residents, new revenue in the Salt Lake City Police Department budget is helping address neighborhood safety. Funding is being used to train and hire 50 new police officers and support staff, along with new equipment like body cameras, to be able to serve 23 neighborhood beats with more accountability. These neighborhood beats will provide the community policing model that residents requested. Community policing emphasizes working with neighborhood residents to coproduce public safety. Law enforcement officials work with community residents to identify problems and collaborate on implementing solutions that produce meaningful results for the community. Specifically, this means developing and adopting policies and strategies that reinforce the importance of multidisciplinary, community team approaches for planning, implementing, and responding to crisis situations.
In March 2018, Salt Lake City contracted with International Association of Chiefs of Police (IACP) to conduct a comprehensive study of the management and operations of the Salt Lake City Police Department (SLCPD). The primary objective of this project was to analyze department staffing of sworn and non-sworn staff and to provide governing body officials and police command staff with appropriate data and recommendations concerning staffing, which are workload-based and supported by metrics and data, and which also follow current best practices with the law enforcement profession. Among others, their recommendations included recruiting, hiring, retaining, and properly training new officers and staff. The study found that at previous levels of staffing (before the new 50 patrol officers), only 10% of officer’s time was allowed for proactive community engagement in neighborhoods. New additional staffing was necessary in order to support the goal of officers spending at least 25% of their time patrolling assigned neighborhood beats so they can develop better relationships in neighborhoods (as opposed to only reactively responding to calls in neighborhoods). Based on the study and constituent feedback, the Mayor and City Council funded 50 new police officers.
This is the status of the officers as of January 2020:
– 23 officers have completed the police academy and Field Training Officer (FTO) Program.
– 1 officer was a rehire, no academy or FTO required
– 13 have completed the academy and are currently in FTO
– 13 will complete the academy in March 2020 and will move to FTO
You can read more here.
The City is continually implementing cost-saving measures to be responsible stewards of tax-payer money. Examples of recent cost-saving measures include small changes like reducing staff travel, office expenditures and purchasing police vehicles in bulk to receive quantity discounts, and large changes like repurposing $2.4 million through a comprehensive review of City accounts, being more diligent about using one-time money to pay for one-time needs, and energy efficiency improvements in buildings and parks.
Because the City paid off two existing bonds in 2019, the GO bond has minimal new financial impact on property owners – an increase of less than $5 a year for the average residential property owner. Commercial properties are calculated differently. At the City’s current bond rate, commercial property owners can expect to pay $25.72 total a year per $100,000 of taxable value.
There are three reasons why property taxes fluctuate from year to year:
1) A tax rate increase from one of the taxing entities including the county, utility districts, libraries and school districts;
2) An increase in the assessed taxable value of your property, and
3) How the values of other properties in the area fluctuate.
Tax bill increases will come in phases, because the City will issue a few smaller bonds (no more than $87 million total) rather than one large $87 million bond. This means the full impact to property tax bills will not happen all at once. This allows the City to maximize bond funding over the full 10-year period allotted. Salt Lake City sold the first $20-million installment of the bond in October 2019 and this will appear on property tax bills in the following tax cycle.
Anyone who spends money in Salt Lake City. This means that, instead of residents carrying the majority of the burden, about 60 percent of this revenue is paid by nonresidents – office workers, visitors, tourists.
Currently, Salt Lake City’s new sales tax rate (effective August 2018) is 7.35%. Comparatively, the current sales tax rate in Murray and South Salt Lake is 7.10% and includes groceries and large purchases. Park City has a tax rate of 8.45% and Moab’s tax rate is 8.60%. The sales tax rate in Sandy City and Provo is 6.85%.
Revenue generated through the sales tax increase is being treated as a separate budget item; setting a precedent of use by future administrations. Residents can track how revenue is being spent on the Funding Our Future Dashboard.
The Funding Our Future sales tax revenue and expenditures, though collected and spent exclusively, is part of the usual, annual budget process. Every year, the Mayor works with each City department to draft a recommended budget. The Mayor then presents her recommended budget to the City Council on May 5 (for the fiscal year of July 1 2020 – June 30 2021). The Council holds several discussions in May and June, which the public is welcome to attend. State law requires the Council to adopt the budget by the end of June. The Funding Our Future streets reconstruction bond followed the normal general obligation bond process. For more information on the GO bond, read this. To learn more about the budget process, read this.
Fund Balance, also known as a “rainy day fund,” is the account that represents the City’s savings account in case of an emergency or other urgent funding needs. A portion of the Funding Our Future sales tax revenue goes into this “rainy day fund.” When City revenues increase (as was the case with Funding Our Future additional sales tax revenue), the City is required to maintain an amount equal to 13% of its yearly revenue in Fund Balance.
City leaders can only change the amount of sales tax with State legislative approval. In 2015, when legislators decided to relocate the State prison to northwest Salt Lake City, they provided the City with the rare opportunity to raise its portion of sales tax by 0.5 percent (as part of HB454).