Consultant outlines new Utah county sales tax option to fund public safety

Marcus Keller, a municipal finance consultant with Cruz & Associates, told the Morgan County Commission on May 6 that a new option in Utah law gives eligible counties authority to add up to 0.30 percentage points of sales tax across the entire county to pay for “public safety.” He said the tax (often referred to in materials as the 2216 sales tax) is available to third- through sixth-class counties that have not enacted certain other mass transit levies and can be applied countywide, including incorporated cities such as Morgan City.

Keller summarized how Iron County and other Utah counties have used the law to finance large capital projects such as jails, fire stations and EMS gear, and to create a revenue stream that can be pledged for sales-tax bonds. He showed the commission a state-provided estimate that Morgan County would have generated about $717,376 in additional sales tax in 2024 if the levy had been in place that year.

Keller said the statute does not define “public safety,” and counties have taken a range of approaches: some use the proceeds only for capital projects (new jails, fire stations), while others have paid operations and maintenance for police, fire and EMS. He told commissioners his recommendation — an opinion he framed as his own — is to prioritize capital projects so the county does not use a potentially permanent revenue stream to cover recurring operating costs that should be addressed through property-tax processes such as truth-in-taxation.

Commissioners asked whether the tax could fund non-jail facilities (courthouses, combined sheriff-courts buildings) and operations and maintenance. Keller said the law’s language has been interpreted flexibly in other counties and recommended consulting bond counsel and legal counsel as projects are refined. He also noted the tax exempts grocery food sales and does not impose a deadline for spending proceeds but advised keeping the money in a capital fund to avoid auditor or fund-balance complications.

Keller explained how sales-tax bonds would typically be underwritten, described coverage ratios (a typical 1.5x debt service coverage example), and shared rough bond-amount illustrations: with $700,000 annual revenue, a county could support roughly $9 million to $12 million in project proceeds depending on term and market conditions. He said Iron County issued about $90 million in sales-tax bonds in its program and Sevier County has used the levy to offset EMS costs while saving some proceeds in a capital fund.

The presentation closed with Keller offering Cruz & Associates’ help in modeling projects (for example a $5 million fire station) and answering legal and finance questions if the commission elects to further explore the option.

Commissioners did not take action at the work session; the presentation was informational and intended to give the county material to consider for future budget and capital-planning discussions.

Keller’s full presentation and the state sales-tax matrix he referenced are in the county packet.