WOODS CROSS — Woods Cross currently has the lowest property tax in Davis County, mainly relying on sales tax revenue.

But with the current economic situation, it’s become apparent to City Manager Gary Uresk that the city has become too reliant on sales tax dollars.

Uresk shared his concerns with members of the city council last week, proposing to implement a municipal energy use tax for residential and commercial properties.

Uresk recognizes that new taxes are never popular, and may be more of a burden to some in this economy. “It’s a rough time to impose a tax, but we need to do it,” Uresk told the Clipper. “We need to take a serious look at expanding the tax base.”

The city has made adjustments within the past year to compensate for the lagging sales tax revenue. The city has eliminated $260,000 from the Capital Improvement Fund for street improvements, minimized the purchase of equipment and vehicles, cut operating expenses, frozen employee salaries for 2010 and spent down the fund balance. “We can do that for a while, but if it goes on too long, the roads will deteriorate, vehicles and equipment will break down and employees will go elsewhere to work,” Uresk said. Additionally the city’s reserves will be gone.

Woods Cross is one of only two cities in Davis County not currently levying the municipal energy tax on electrical power and natural gas. Fruit Heights is the other. Only 14 percent of general fund revenue in Woods Cross comes from property tax. “The amount we pay the fire agency isn’t even covered by property tax,” Uresk said. “That kind of gives you a perspective on how much we rely on sales tax.”

During the boom times, sales tax collections skyrocketed. In fiscal year 2005, the city collected nearly $1.75 million in sales tax revenue. That rose by $260,000 in 2006. However by 2009, sales tax collection had fallen by $233,000.

Uresk estimates that if the city decides to levy the tax, it could bring in some $400,000, enough to make up for a $421,000 decrease in revenue the city has experienced in sales tax revenue since fiscal year 2006. “We’re operating today at the same sales tax revenue level as in fiscal year 2005,” he said.

Woods Cross receives the majority of its sales tax dollars from two companies operating in the city. Uresk said that in fiscal year 2004 the two companies brought in 19 percent of the city’s sales tax revenue. That dropped to 17 percent in 2006 and was down to 9 percent in 2009.

The municipal energy use tax can be assessed up to 6 percent. Uresk said if the tax is passed, the typical resident will pay about $150 annually.

A public hearing on the proposal will be held at the Feb. 16 city council meeting and information will be posted on the city’s website and in its newsletter.

Uresk emphasizes at this point the plan is only a proposal. “This is not a done deal. The council is willing to listen to residents’ concerns.”

mwilliams@davisclipper.com