“If Thomas Jefferson thought taxation without representation was bad, he should see how it is with representation.” – Rush Limbaugh. Many Pleasant Grove taxpayers would likely echo Mr. Limbaugh’s sentiment as the City Council considers a $19 million tax increase to construct a new, costly public safety building. That was evident in the City’s Truth in Taxation hearing where an estimated 400 people showed up, with over 100 expressing their concerns to the Council.
The City Council's proposal to increase taxes uses its Municipal Bonding Authority (MBA), which will cost taxpayers millions more in interest. An MBA bond requires only the vote of the Council and carries a higher interest rate than a General Obligation bond. General Obligation bonds carry the full faith and credit of all of the property of a city, whereas the funding for an MBA bond can vary, resulting in higher interest rates.
In addition, the Council has decided to increase property taxes permanently to pay for the proposed bond. That's right, even when the proposed 20-year bond is paid off, Pleasant Grove taxpayers will still be paying higher taxes. The alternative, a General Obligation bond, would only impose an increased tax for the duration of the bond.
To illustrate this, let's consider taking out a five-year loan to buy a car using two options. With option A, you pay a higher interest rate and never pay off the car. This is the option that the City Council has proposed using its MBA. With option B, a General Obligation bond, you pay off the car in 5 years and are done. No more payments. Which one sounds more attractive to you? The City should choose option B and pay for one-time costs with one-time money, not a permanent tax increase on the taxpayers of Pleasant Grove.
The need for new police and fire buildings may be real. The Council will argue that since the current police building and fire station were built, Pleasant Grove grew from around 11,000 in 1980 to over 34,000 today. The police have outgrown the existing space, even using an elevator shaft for storage. The fire station has seismic concerns and cramped quarters for firemen to move about, causing concern when mobility is limited and timing is critical in an emergency. But, this tax increase goes far beyond solving those two problems, and it is far too costly for the taxpayers of Pleasant Grove.
In fact, one developer explained that given the amount that the Council was willing to spend, he could build a facility for $4 million less and include over 100 bays, 50 bathrooms, 30 offices, 800 outdoor parking stalls and numerous other features. It was apparent after statements from developer after developer that the proposed tax increase was far too high and that the City's needs could be met with much less money from taxpayer's pockets.
Pleasant Grove's City Council said that in order to save taxpayers money it would need to act quickly to lock in lower interest rates and lower construction costs. The first chapter in the hypothetical "How to Govern" handbook surely states that construction rates and interest rates are always on the cusp of increasing, considering every government entity, everywhere, utilizes it as a reason to act hastily.
By design, governments are slow and deliberative. In order to realize true savings for taxpayers, the Pleasant Grove City Council should reconsider the expensive proposal, continue educating taxpayers, and let them vote on the proposal.
• Chase Everton is the Research Analyst at the Utah Taxpayers Association