Cottonwood Heights retreat highlights structural budget gap; city weighs tax increases, cuts and a citizen budget panel

A financial-sustainability model presented at the Cottonwood Heights city council retreat showed the city faces a structural gap between revenues and expenses that will erode unrestricted reserves unless the council adopts revenue increases, cuts or both.

Scott, the city's finance lead, told the council that property-tax revenue has been relatively flat and that new-growth property taxes add only about $50,000 a year on average. That limited upward pressure on revenue, together with slowing sales-tax growth, fed the consultant's projection that the city's $4.0 million unrestricted fund balance could be consumed within several years under a do-nothing scenario.

Consultant findings and why they matter

The consultant ran two principal scenarios: one that assumes only inflationary increases and no new service or capital spending, and a second that layers in all new one-time capital and ongoing operational requests from department heads. The second option produces a material shortfall in year one and pushes reserves below prudent levels by year three without corrective steps.

Officials emphasized that the model is a planning tool, not a budget. The council asked staff to use the model to test several policy levers: (a) targeted cuts and reprioritization of requested items, (b) a comprehensive fee study to align charges with service costs, and (c) property-tax options including a one-time increase to restore purchasing power and a policy to keep levies aligned with inflation going forward.

What the proposed tax increases would mean

The consultant and staff said a 25% property-tax increase in a single year would generate about $2 million and materially reduce near-term pressure, but would not fully guard against long-term erosion unless paired with annual inflationary adjustments or new recurring revenue sources. Staff noted that each 10% on the current base is roughly equivalent to $800,000 in new property-tax revenue; council members asked for dollar-level examples to use in public communications rather than raw percentages.

Public engagement and process steps

Council members endorsed creating a citizen budget advisory committee (recommended size: 6—7 to 12 members, with district and at-large seats) to review priorities, help frame public outreach and recommend a balanced approach. Staff will prepare an application and proposed charge for the committee and return with a more detailed budget package and scenario outputs at a March follow-up retreat.

Next steps

Staff will use the model to: produce a constrained baseline that omits unfunded O&M and front-loaded CIP items, produce a tax-increase scenario with illustrative dollar impacts, and prepare a priority list for cuts and fee studies. The council scheduled an afternoon retreat in March to consider a more detailed proposal and instructed staff to begin outreach and to bring back options for a citizen advisory committee.