On Tuesday, the Orem City Council approved the tentative budget for 2023.

The budget is approximately $140 million compared to the budget for Fiscal Year 2022, which was approximately $131 million, with the money going to personnel, operations and capital projects. Public hearings will be held in June after the council reviews the proposal.

Despite COVID-19, Orem had significant growth in sales tax revenue. There will be no property tax increase in 2023.

“The budget is built with a conservative mindset in 2021-2022, according to Brandon Nelson, director of finance for the city of Orem, underestimating revenues and overestimating expenses,” said Jamie Davidson, city manager. “All revenue collections and expenditures are monitored throughout the year by management and administrative controls.”

Davidson said safeguards have been developed to monitor, authorize and analyze expenditures. These processes and safeguards allow staff the ability to amend the budget quickly, thereby allowing the city to respond to any unanticipated changes or economic circumstances as they become known.

The General Fund should be supported by diverse, stable revenue sources that do not collectively result in dramatic fluctuations over time.

• Reserves — Develop and maintain healthy enterprise fund reserves to sustain the impacts of emergencies. Manage a healthy General Fund with reserves consistent with state law.
• Planning — Plan ahead with the big picture in mind. Provide a means for employees across department lines to consult with each other during planning processes. Seek community input through a variety of means (social media outlets, surveys, open houses, etc.).

The Mayor and City Council govern consistently with the city’s budget-guiding principles, as well as particular “Areas of Focus” that are reviewed annually. The current City Council’s “Areas of Focus” were developed in advance of the budget process so city staff could consider these priorities in their operational expansion requests and department goals. They include the following:

• Safe and Livable Neighborhoods
• Thriving and Balanced Business Environment
• Dependable Infrastructure
• Community-Focused and Effective Government
• Skilled and Talented Workforce

“The local economy continues to perform well but the city is not immune to the inflationary and supply shortage pressures being felt throughout the nation,” Davidson said. “While the city expects sales tax and other revenues to continue to be strong, construction and product costs have escalated in price or become hard to obtain making it difficult to complete some projects and get certain products.”

The city is also dealing with shortages in personnel, as the labor market continues to struggle to provide enough employees to fill vacant positions.

Various service fee increases are requested to bring services more in-line with their delivery costs.

Sales taxes for FY 2022-2023 are anticipated to be $31 million, representing approximately a 5% increase over the previous year.

This increase is quite conservative as FY 2021-2022 is currently trending higher than the 5% being used as the base estimate to calculate the FY 2022-2023 sales tax revenue estimate.

“Building fees have returned to their normal base amount of $815,000 (they were reduced to $400,000 for the FY 2021 – 2022 budget) as they appear to have stabilized as we ease out of the pandemic.” Davidson said. They are normally understated in the General Fund as these fees represent one-time revenues and in accordance with the city’s budget guiding principles have any excess revenues over the budgeted base amount used to fund capital improvement type projects in the following fiscal year.”

The base-rate increase for both water and sewer is 0.5% and the increase for each tier of water use is $0.01 per 1,000 gallons. Stormwater equivalent service unit fees are scheduled to increase to $8 per ESU per month from the current fee of $7.80 per month.

“While these proposed increases won’t cover the cost of inflation, it represents our best balancing of funding needs and impact to our residents.” Davidson added.

The new fiscal year will also see residential waste fees rise consistent with the city’s contracted relationship with Waste Management of Utah (WM). The long-term contract accounts for fee adjustments based on increases in WM service delivery costs resulting from existing market forces.

The operational portion of the budget has been adjusted in many areas due to a need for more electronic capabilities.

There are also needs to improve facilities to obtain state and federal funding for various city projects.

“Through adherence to sound financial principles and the efforts of the city’s dedicated workforce, I believe the City of Orem has capably navigated through the challenges of the COVID-19 pandemic in sound financial condition,”Davidson said. “These same sound financial principles will help the city address and persevere the current workforce and inflationary pressures.”

Residents interested in seeing the full tentative budget can view it on the cities website. A public hearing will be held at 6 p.m. on June 14 before the council gives final approval.

Newsletter