Eureka council confronts roughly $102,000 general-fund shortfall; staff to run tax scenarios

EUREKA, Utah — At a May 7 budget work session, city staff told the Eureka City Council the proposed fiscal‑year 2026 budget shows about $708,350 in projected general‑fund expenditures against roughly $605,955 in projected general‑fund revenue, leaving a shortfall the group said would require cuts, new revenue or both.

Patricia, a city staff member who led the financial review, said: "The general fund has to be balanced. It has to come out even. And if it's not in the budget, you're not supposed to spend it." She presented line‑item changes and noted recurring practice of making amendments during the year when actual spending exceeded budgeted amounts.

Council members and staff focused on Truth in Taxation — the state process that lets a municipality hold hearings if it plans to take in more property‑tax revenue than the certified tax rate would generate. Patricia explained where to find the tax rates and discussed example scenarios for raising the municipal share of property taxes. Using figures discussed at the meeting, staff said a move to a municipal levy in the 0.0015–0.002 range would materially increase local revenue; one scenario Patricia referenced produced an estimated additional $111,837. She also cited the assessor’s reported average residential assessed value in town (about $155,008) when showing how changes would affect the typical homeowner.

Why it matters: Council members said the city needs money to cover planned projects and recurring needs — including capital outlay for vehicles, water‑system work and code enforcement — and they want to avoid repeatedly relying on midyear amendments. The meeting explored whether to pursue a Truth in Taxation process this spring (deadlines for certified tax‑rate reporting and hearings fall in June and later summer), and whether to pursue smaller annual increases instead of a single larger one.

Details and discussion

- Budget gap: Patricia showed projected FY2026 general‑fund expenditures of about $708,350 versus projected revenue of about $605,955. Council members said the gap requires either spending cuts or new revenue; Patricia asked departments to submit grant and project figures to firm up numbers. (Provenance: staff presentation.)

- Property taxes and Truth in Taxation: Patricia pointed to the State Tax Commission website as the source for the certified tax rate and walked council through how assessed‑valuation changes affect revenue even if the rate is unchanged. She gave the current local rate used for the example as 0.000975975 and explained that, if the city maintains the same rate as assessed values rise, the amount collected increases; pursuing Truth in Taxation would explicitly notify the public and require hearings. Council asked staff to model scenarios (incremental increases and larger one‑time increases) and to estimate household impacts for average and for higher valuations.

- Other revenue sources: The group reviewed transportation and sales‑tax receipts and a recent transportation tax boost tied to a new service station near the freeway. Patricia noted that sales and transportation tax receipts can be variable and that some state‑administered collections (transient room tax, portions of sales tax) arrive to the city via the state.

- Deadlines and next steps: Council members asked staff to prepare revenue scenarios and to deliver recommended figures for a possible Truth in Taxation decision by the June certified‑rate deadlines. Patricia said the county requires notice of whether the city will pursue Truth in Taxation by early June so public hearings can be scheduled.

Ending

Council members agreed to have staff prepare several modeled tax‑rate scenarios (moderate and aggressive increases and the likely household impact) for discussion at upcoming meetings so the council can decide whether to begin a Truth in Taxation process. No formal action (motion or vote) to set a tax increase was taken during the May 7 session.