On Tuesday, the Orem City Council was informed that for the city to have long-term financial sustainability, leadership needs to plan now. That planning may include raising the city’s portion of the property tax.

Part of the preparation for the coming fiscal year 2020-2021 budget will most likely include a truth in taxation request.

“Our intent will include a truth in taxation to keep up with priorities you (the council) have given us,” said Jamie Davidson, city manager.

Laura Lewis and Cody Hill, financial consultants with Lewis, Young, Robertson & Burningham, have been studying and gathering data on Orem and other area cities to bring some understanding on the long-term financial sustainability of the city.

The forecasts go to 2040. Their model adjusts for increases in revenues and growth but not in other areas such as bringing on new personnel.

It will be a guide for future budget planning, Lewis said.

According to the analysis, Orem has a great retail center and healthy sales tax revenue.

“Revenues fluctuate with the economy,” Lewis said. “If the state changes the (tax)formula, there will be a more service-based economy. The impact from any future changes in the formula is unknown.”

Lewis noted there are many things that can affect the economy. “The coronavirus could have negative impacts. You don’t know how it affects you — yet.”

Hill said there are many cities in the past 10 years that have had to grapple with that.

Orem has the lowest overall tax rate in the county. Springville, on the other hand, has the highest. Vineyard and Spanish Fork run second and third.

“I’d argue philosophically you have room to raise taxes,” Lewis said.

Davidson said the city has listened to some residents who want the market to dictate the conversation.

“The cost curve is unsustainable in the future and will exceed revenues in the future,” Davidson said.

The most important thing Orem needs to do, he says, is educate residents on what maintaining services at current rates will do as they reach 2040.

Davidson noted that a city vehicle purchased last year for $40,000 is $46,000 this year.

Lewis said that if the city increases the property tax in 2021 by $1.08 a month, it will generally put Orem on a good trajectory.

It’s like going back to 1980 to work and get income, then coming forward in time to buy groceries and gas, Lewis said.

Davidson said the council should consider long-term sustainability before the budget is received for approval in June.

Daily Herald reporter Genelle Pugmire can be contacted at gpugmire@heraldextra.com, (801) 344-2910, Twitter @gpugmire

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