Thanks to the Sandy and Draper city councils, Salt Lake City will soon have even more revenue to fund transit expansion and road repairs. On Tuesday both councils joined councils representing Salt Lake City, Midvale, Millcreek, Murray, South Jordan, South Salt Lake and Holladay in endorsing a 0.25 percent sales tax increase to fund transit and local and regional transportation projects.
The sales tax increase is the same as the one proposed in the failed Proposition 1 initiative. That initiative was narrowly defeated in November 2015. During the 2018 Utah State Legislature Session, state leaders opted to allow county governments the opportunity to unilaterally enact the tax increase.
In March, the Salt Lake County Council also decided to pass the baton, by turning to city councils to decide whether to endorse it, setting a threshold of municipal support from cities representing 67 percent of the county population. With Sandy and Draper councils’ endorsements that threshold was met on Tuesday.
Like Salt Lake City’s recently approved sales tax increase, the county’s tax increase will go into effect October 1. The county will initially collect 100 percent of the new tax revenue and disperse funds on an as-needed-basis. Starting July 1, 2019, the county will collect 20 percent of new funds while the remaining revenue will be equally dispersed between cities and UTA, with both receiving 40 percent of the tax revenue.
Salt Lake’s current sales tax rate is 6.85 percent. After both the city’s 0.5 percent and the county’s 0.25 percent tax increases go into effect, the tax rate will be 7.6 percent. According to the Tax Foundation, a tax policy nonprofit, 29 states have a higher state and average local sales tax than Utah. The state has a combined tax rate of 6.76 percent. With the increases, Salt Lake’s sale tax rate will be similar to Denver’s rate but lower than other neighboring large cities. The sale tax rates in Denver is 7.65. The rates of Phoenix, Seattle and Las Vegas range from 8.15 percent (Las Vegas) to 9.6 percent (Seattle). In fact, of the 116 cities with populations larger than 200,000 people, even with the sales tax increase, Salt Lake’s rate would be lower than 72 of those cities.