KAYSVILLE - Discussions relating to the city budget in Kaysville will be a bit more complicated this year.
They could also result in a significant increase in property tax rates, which may or may not be offset by a decrease in electric utility rates.
A 40 percent increase in property taxes is one of the very real possibilities, according to Mayor Steve Hiatt.
The increase is necessary in part, because of a citizen initiative passed last year that prohibits the city from using money raised through its electric utility for anything other than electricity.
In a previous budget, the city council had transferred $265,000 from the city’s electric utility fund to its general fund to cover salaries of three additional police officers.
Such transfers are legal, according to authorities, and similar transfers between funds are made annually in Bountiful, another city with its own power company.
A recent decision from the state auditor’s office has added to the fiscal issues.
General funds must now be used to pay for city street lights and other power needs, something that will require another approximately $140,000 from the city budget, said Hiatt.
The mayor is also concerned that one-time capital expenses, such as those necessary for large pieces of equipment or one-time roadway improvements, can no longer be funded with power fund revenues.
Kaysville City Council will meet for a workshop on the budget on Saturday, April 26, beginning at 8 a.m.
At the same time, they will discuss power fund revenues.
The recent sale of property bordering Flint Street at 200 North has returned $4.2 million to the power fund. That money was designated for economic development, and the land acquired is slated to become the home of a Smith’s Marketplace and other businesses.
How much of that money will need to be held in reserve for electricity needs in order to maintain an AAA bond rating will be considered before determining if there is enough left to lower rates, said Hiatt.
“This Saturday meeting is meant to be a phase one budget discussion for the council,” said Hiatt. “We’ll talk about the impact of the money sold, money returned, and what to do with the power fund.”
Art Morley, one of the sponsors of the measure that separated the two funds, said that during the campaign, sponsors determined that a 33 percent increase in tax rates to cover the $265,000 would cost homeowners less than the 9.65 percent increase in power rates imposed last year.
“Proposition 5 was more about transparency and where the money was going,” he said. “I would have saved $20 to have a tax increase over a rate increase and I can write that off on my federal income taxes.”
“We certainly hope they’ll go down,” said Morley of power rates. “Last time, 2.2 percent (of the power rate increase) was to hire policemen, so they’re not doing that any longer.”
While power rates may go down, the impact on property taxes will likely be “substantial” and “a bit of a sticker shock” to those who campaigned for the proposition, said Hiatt.
“We’ll put together what we think is the best approach and certainly provide an opportunity (for the public) to comment,” he said.