Cities in Utah County that charge residents a transportation utility fee to fund road maintenance and construction projects are contemplating the future of such fees after a judge ruled that Pleasant Grove’s fee is technically a tax and is therefore being collected illegally.
Last Wednesday, a Fourth District Court judge said that Pleasant Grove’s “Transportation Utility Fee” (TUF) that the city council and mayor approved in April 2018 “is clearly a tax and therefore (is being) improperly collected until the City satisfies the additional requirements set out by the Utah Code for an increase in the tax rate.”
Taxes are used to fund general governmental projects while fees go toward specific, quantifiable services that residents pay for, such as garbage collection or electricity, according to Libertas Institute President Connor Boyack, whose group funded the lawsuit against Pleasant Grove.
A handful of other cities throughout the state have transportation utility fees in place similar to Pleasant Grove’s. The ones in Utah County include Provo, Vineyard, Highland and Mapleton.
Boyack said the lawsuit focused on Pleasant Grove because it was the most recent city to implement such a fee.
“Because Pleasant Grove’s implementation was the newest, we decided that our legal challenge should focus on them rather than another city who had already grown reliant on, and had been using, these funds,” said Boyack.
On Wednesday, Pleasant Grove City Administrator Scott Darrington said the city is “still contemplating” whether to appeal the ruling as city officials and attorneys discuss how to move forward.
“We’re still weighing our options on how to proceed legally,” Darrington said, adding that the city has yet to receive a judge’s order and will have 30 days after that to decide whether to appeal the ruling.
Darrington added that Pleasant Grove residents have made it clear that funding road maintenance is a priority for them, and that a utility fee was the city’s only mechanism for doing so.
“Our intent was to fix the roads,” said Darrington. “We want to fix them.”
Since Pleasant Grove was the only city named in the lawsuit, Darrington said other cities will have to decide whether to continue collecting transportation utility fees or start looking for other revenue streams to fund roads.
“They’ll have their own decisions to make on how they’re going to proceed,” he said. “Right now, we’re just trying to proceed in what’s in the best interest of our city.”
In May 2017, the Highland City Council voted to create a “Transportation Utility Fund” and charge residents $18.50 a month to fund road projects, according to City Engineer Todd Trane.
Trane said the city put out a survey asking residents what the best way to fund roads would be, and most people supported the idea of a utility fee.
“Instead of doing a tax, they chose a fee,” said Trane. “That’s how they wanted to fund roads. And so that’s why our council decided to go that route.”
Trane said the fee has been a successful mechanism for funding roads in the more than two years it’s been in place.
“The program has been going well,” he said. “We’ve been able to collect about $1 million a year from our residents with the fee, and it goes into a completely separate fund that we use solely for roads.”
According to Trane, the city has been following the lawsuit involving Pleasant Grove but is still putting together a plan for how to move forward with the transportation utility fee. As of Wednesday, the city still plans to collect it.
David Church, general counsel for the Utah League of Cities and Towns, said the group is “disappointed” with the court’s ruling, adding that these fees are necessary to fund roads that all residents drive on and benefit from.
“We believe these kinds of fees are appropriate,” Church said. “It’s another tool in the city’s toolboxes to aid in transportation (and) road maintenance.”
Church said cities are limited in ways to increase funding for roads and other government services.
“If these kind(s) of fees aren’t allowed to raise money, then the only other source of revenue for the roads is going to be property tax increases, because (the) gas tax is insufficient to maintain the costs of the roads,” he said. “They need to subsidize the gas tax with other forms of revenue.”