Monday, February 6, 2017

An Open Letter Regarding HB 164

Senator Curt Branble
Senator Deidre Henderson
Representative Dean Sanpei
Representative Keith Grover
Representative Keven Stratton
Representative Margaret Dayton
Representative Norm Thurston
6 Feb 2017

Dear Senators and Representatives,

The Provo Municipal Council is in the midst of a multi-year effort to better align our fees and other revenue with the costs of providing the related services. Having services paid for by the people receiving the services is a good general principle of governance. I believe I understand the motivation behind House Bill 164 - Municipal Enterprise Fund Amendments, which, as currently proposed, would limit the ability of cities to transfer money from enterprise funds to our general funds. It follows this principle to limit the use of the money collected in power bills to power related costs.

But there are other principles of good governance which must be balanced. One such principle is that the more local government is, the more responsive and accountable it can be. The circumstances in Provo are different than in Salt Lake or in Fairfield. There should be a compelling reason to restrict the freedom of local communities to govern themselves and to tailor the revenues and expenditures of their own communities to meet their own needs.

Provo is home to some excellent institutions. We love having them as part of our community. They are a part of our identity. We enjoy playing host to both the institutions and the many residents of other cities who frequent them. These institutions and their patrons benefit from the general services that the City provides -- parks, streets, public safety. They add to the cost of providing these services but may not directly pay for these services through property taxes. While this is not unique to Provo, I do not know of another city in the State where roughly half of the land is tax-exempt.

Roughly 19% of our general fund revenue comes from enterprise fund transfers. Our utility rates are still competitive, below the average in the area. Provo residents benefit from the sacrifices of earlier generations who invested in creating publicly owned utilities. Our residents are in essence our shareholders. The dividends that are paid out to shareholders in corporate utilities are returned to our residents in the form of lower property taxes, possible because of our ability to transfer money from our enterprise funds to our general fund.

If HB 164 is passed, our utility rates will go down, and our property taxes will have to go up to maintain the same levels of service that the City currently provides. Because so much of our property and so many of our service generators are tax exempt, the magnitude of the property tax burden is multiplied on those who do pay property taxes.

In the case of Provo, the principles of government being as local as possible and of having services paid for by the people receiving the services are both best by not passing HB 164.

Thank you for reading and for your service to the people of Utah.

David Harding
Provo City Council -- District 5