Morgan City leaders consider small property tax increase

Morgan City Council declined to accept the Utah certified tax rate at its most recent meeting, June 18. To do so would have resulted in a budget shortfall, City Manager Ty Bailey told the city council. Morgan will now have to have a Truth in Taxation hearing before Sept. 1.

The certified tax rate is supposed to provide a taxing entity with the same amount of property tax revenue it received in the previous tax year plus any revenue generated by additional growth in its tax base. The rate is adjusted by the state each year based on the rise or fall of property values. A home or business’s value is determined at the time it is assessed, which varies.

“My suspicion is that all of the homes in Morgan City don't get evaluated all at the same time,” Councilmember Dave Alexander said.

The new certified tax rate of .001281 would produce a revenue of $647,884, which is $3,975 less than 2023-2024 actuals and $15,286 less than 2024 actuals with delinquencies.

Instead of adopting the certified tax rate set by the state right away, the city council is also considering two other options. The first is enacting a new .001345 tax rate based on Bailey’s tentative budget of $680,000, which would be a reduction of the tax rate, but would be considered a tax increase of 5.19 percent. 

To illustrate, this would mean Morgan City’s share of property tax on a $580,000 residence would increase from $408.64 to $429.06, which is $20.42 per year. On a $580,000 business it would increase from $742.98 to $780.10, which is $37.12 per year.

Alternatively, Morgan City could keep the 2023-24 rate of .001471 which would generate $743,979 which would be $92,120 more than 2024 actuals. It would be considered a tax increase of 15.04 percent.

“On a $580,000 home the increase would be $606, and for a business it would be $110.20 per year,” Bailey said. “Option three is just holding what we’ve done; it’s the same rate as we had the last two years.”

Although they did not make a decision that night, the majority of council members seemed to be leaning toward the second option.

“I think my feeling is that Option Two funds the budget that Ty has requested,” Alexander said.

Regardless of any action Morgan City leaders take, anticipated revenues from property taxes are not guaranteed, Bailey said. “The city’s portion of property tax is still a lower rate, and so in the whole world of things, if the county and the school district property tax goes down and ours goes up there still might be a net decrease.”

Utah law requires Truth in Taxation hearings to be held when a taxing entity seeks to collect more revenue than was collected the previous year, although the entities are permitted to keep revenues generated by new growth. 

By holding off on accepting the tax rate, it also means the city has to delay approval of its 2024-2025 budget. The city council is expected to further discuss these options at an upcoming work session.

Along with this action the city council also approved across the board compensation increases of 4 percent for executive city employees after holding a public hearing. This year the Utah Legislature passed a new law that requires a public hearing to take such an action.λ