Many small business owners in Tooele City are concerned over a proposed increase in their property tax payment to the city, according to Jared Hamner, executive director of the Tooele County Chamber of Commerce.
“Obviously, they’re quite concerned,” Hamner said. “Some of them say they will be OK if people shop locally. Business owners I’ve talked to said they wish the tax increase could have been done incrementally instead of all at once. It’s a sad deal.”
Hamner said he has talked mostly to small business owners like barber shops and antique shops.
“They’re concerned because now they have to readjust their budgets,” Hamner said.
On June 20, the Tooele City Council approved its 2018-19 fiscal year budget, which includes a proposed 115-percent city property tax increase. Mayor Debbie Winn and the council say the tax increase is needed because expenditures have exceeded revenue for years, and the city can no longer tap into savings to cover expenses.
Winn and the council also want the tax increase to help build a new public safety building.
Although the budget was approved last month, the tax increase remains proposed until a state required Truth-In-Taxation hearing is held on Aug. 15.
Business owners are particularly concerned about the tax increase because their city property taxes are based on 100 percent of the market value of their properties. In contrast, residential property owners pay 55 percent of their home’s market value.
A commercial property in Tooele City valued at $150,000 paid $275 last year in city property tax. Under the proposed tax increase, the city tax bill for the same property jumps to $590 this year — andincrease of $315.
A commercial property valued at $480,000 last year paid $879. With the tax increase, it would pay $1,899 this year, an increase of $1,010.
The size of the tax increase was a hot point of discussion during a June 20 public hearing on the proposed budget and tax increase.
“As a business owner, I am receiving a rather large increase,” said Aaron Peterson of Peterson Industrial Depot during the public hearing. “… This increase takes away from us being able to support the community that we live in.”
He said his company generated $253,597 in sales tax last year.
“You’re proposed property tax increase for us is just $6 shy of $40K. So I ask as a business owner — where do I go to make up $40K?” Peterson said.
“This takes away from our employee benefits, our cost-of-living increases our insurance increases,” he added. “We face the same problems you (Tooele City) do, but in order to stay competitive in the market that we’re in, we just can’t pass the buck. We live in a competitive private industry where we bid jobs out and that’s what we face.”
Hamner said that one business owner said it was disheartening that he will have to pay more taxes to pay for a lawsuit the city lost. He said the business owner said he may have to layoff an employee to pay his tax bill.
Councilman Scott Wardle responded to questions about the lawsuit during the June 20 public hearing.
“We’ve done everything we can to decrease the exposure to the citizens,” Wardle said. “Most of us weren’t here when the lawsuit started.”
The lawsuit Wardle referred to is the one between Tooele City and Overlake Development, which was settled a few years ago with the city agreeing to pay $22 million.
Wardle said the $22 million judgment levy was negotiated in half to $11 million by donating water rights to help pay for the judgment. He said the city has used savings to pay for the bond payment the past two years, according to the minutes of the meeting.
Winn said businesses understand there is going to be a tax increase.
“I’ve made a commitment to them to make Tooele a business-friendly city,” she said. “We are going to work with our businesses to help them do business. They have to provide good service and do their part, but we are going to be a willing partner with them.”
Winn said Tooele residents should support Tooele businesses as much possible.
Tyson Hamilton, owner of Another Man’s Treasures, also spoke at the June 20 meeting.
He said as a business owner, he doesn’t like the tax increase, but he supports it because it is needed. He said he supports a strong police force, according to minutes from the meeting.
If individuals shop locally it will help local business owners pay for the tax increase, Hamilton said.