Wellington gets sympathy, but no budget solution
There was plenty of sympathy but little in the way of clear solutions for Wellington's budget crisis on Capitol Hill Wednesday.
That was the summary of Mayor Ben Blackburn, who testified on behalf of the city at a session of the Utah Legislature's Revenue and Taxation Interim Committee. In his report later to the city council, Blackburn said the panel shot down the idea that cities be allowed to levy a one-percent sales tax on mining equipment to make up for the losses they incurred when the legislature exempted the supply companies from the tax two years ago. Lawmakers didn't even consider a half percent make-up tax.
Wellington, which has lost about a third of its annual revenue as a result, is in a class by itself. "They said we were hit the worst of all the cities," he reported.
In his remarks to the council and in an interview later, the mayor made it clear he is not playing the "blame game" in this situation. He doesn't fault the companies and understands that legislators wanted to help the companies through hard times when they enacted the exemption. But the mayor, who is already volunteering his time to do grounds keeping and custodial work for the city, wants some help.
The city is going to find it difficult - if not impossible - to meet its obligations on a Community Impact Board loan next fiscal year, he explained. Ironically, the obligation is to the state, which has cut off the source of revenue to pay it. The CIB can defer payment on loan principal, but is powerless to put off interest payments.
"Wellington got caught in a perfect storm. First there was the recession, then this [exemption]," commented Rep. Christine Watkins (D-Price) on Thursday. Then came the readjustment in the point of collection of whatever tax was being paid. It is no longer the point of sale, but the point of delivery. This means that the tax on non-exempt sales is collected at the mines in the unincorporated county, rather than at the sales facilities in the city. She said the legislators realize that Wellington is an anomaly in the magnitude of the impact and want to help.
Watkins said she and Sen. David Hinkins (R-Ferron) will be working with the legislative general council to determine what the law is regarding the CIB's ability to adjust loan payments or convert a loan into an outright grant. After study, it may be possible - if necessary - to amend the law to give the board some flexibility in handling special situations such as Wellington. The CIB gets its seed money from taxes on coal, oil and natural gas and awards grants and/or loans to municipal and county governments impacted by energy development.
Another avenue is to work with mining and mine supply companies to see what additional help is available, according to Blackburn and Watkins. "They are not bad guys," Watkins said of the companies.
A property tax hike in the city is not an option. Blackburn said there's not enough property in the little town of 1,400 to make a difference, and besides, "If we passed a tax increase, they [citizens] would hang us."