Cottonwood Heights council retreat lays out options to close $2.7M shortfall; staff told to model fee and compensation scenarios

At a retreat dominated by budget choices, Cottonwood Heights city leaders were presented with scenarios staff said are needed to close a roughly $2.7 million gap for the coming fiscal year and agreed on direction for follow‑up modeling.

City Manager Jared Herbert opened the session by warning the council that staff were “very far behind in the budget process” and needed council direction on revenue and cut priorities so that a preliminary budget could be ready in May. “We really want to stay high level,” Herbert said, asking council members to focus on department‑level tradeoffs rather than line items.

Finance staff summarized the city’s recent fiscal trends and pointed to several drivers of growth: added positions (some formerly contracted), a rise in salary and benefit costs and transfers to other funds for debt service, roads and stormwater. Finance staff member Scott George outlined that transfers out of the general fund—debt service, a $2 million capital transfer and a $200,000 transfer to the stormwater fund—account for a significant portion of the change in expenditures.

Stormwater fee, Walgreens lease revenue and transfers

Councilors discussed two near‑term revenue levers staff asked them to consider. First, staff proposed raising the stormwater ERU fee so the stormwater fund no longer requires a roughly $200,000 annual general‑fund transfer. Scott George said the current fee is $8.44 per ERU (projected to $8.69); staff estimated that replacing the $200,000 transfer and the routine escalation would require roughly a 12–15% increase (a staff illustration showed a roughly $0.88 ERU bump equating to net annual revenue near $250,000). George warned that a full funding level from an earlier, more comprehensive study would have required a larger increase (the earlier study had estimated roughly $16/ERU to fully fund all needs).

Second, the council debated whether to move lease revenue from the Walgreens property (roughly $19,000/month, or about $230k–$240k/year) from the CDRA project fund into the general fund. Some councilors argued transferring the revenue to the general fund would help close the gap and honor public bond promises; others said retaining it in CDRA would support town‑center costs. Staff said either approach was feasible and that they would show the mechanics and consequences of each option.

Cuts, service tradeoffs and parks maintenance

Staff also presented a menu of reductions that would not add staff impacts, including eliminating or reducing some events and programs (culture division changes saved about $210,000 ongoing; trimming other events and small‑business spending produced smaller savings), reducing travel and training and consolidating lobbying contracts. Council members were split on removing visible community items such as a printed newsletter or annual festivals, saying they wanted clearer estimates of service‑level impacts and resident messaging.

On parks maintenance, staff estimated bringing maintenance in‑house would cost roughly $350,000–$400,000 annually with about $180,000 in one‑time equipment startup; contracting with the existing recreation district would carry a large-year increase in their passed‑through charge (staff estimated a ~55% increase from the rec district in one example). Councilors asked staff to produce a side‑by‑side comparison of options (remain contracted, rebid, or in‑house) including timing of one‑time costs and how services and programming would be affected.

Compensation and public safety staffing risk

A market and step‑plan study gave the council three broad compensation paths. Staff estimated a scenario that implements market adjustments and police step changes would cost roughly $600,000 (about a 6% net compensation/benefits impact in staff modeling). Staff modeled alternatives made up of some combination of market, merit and cost‑of‑living increases. The police chief (staff speaker for public safety) described immediate staffing pressure—at the time of the retreat the department was down several officers and relying on overtime—calling attention to safety and recruitment risks if pay remains uncompetitive.

Council discussion centered on what portion of compensation cost the council would authorize staff to model. Several councilors said they did not want to sustain a multi‑year 6% increase, while others urged protecting staffing levels. After discussion the body directed staff to model compensation scenarios in the roughly 3%–4% range (council comments converged toward a compromise around 3.5% as a starting point to refine), and to show the fiscal impact with and without benefit changes.

Town center, capital projects and deadlines

Councilors also revisited the town‑center project. Staff presented options including selling a residential or grocery parcel to help reduce near‑term city debt; councilors cautioned that splitting ownership could weaken incentives for commercial build‑out and asked staff to prepare negotiation terms tying any sale to commercial delivery or timelines. Relatedly, staff urged the council to approve advancing a Bangor‑Highland intersection and trail phase because approximately $1.1 million in external funds is available but subject to an expiration schedule; the estimated city match was about $150k–$160k and staff said that match is budgeted in capital. Staff said they were negotiating short extensions with grant partners but asked for guidance about proceeding.

Process and next steps

Staff and the city’s finance advisor outlined the truth‑in‑taxation timeline and new notice requirements: if the council advertises a tax increase it must notify the county auditor by June 1 and adopt an interim budget in June (holding any advertised increment in reserve) and the final vote occurs at the August truth‑in‑taxation hearing, which can address only tax‑hearing business that night. Carrie Nakamura, the advisor, underscored that the new law requires clearer, department‑level impact schedules and more public notice than prior years.

The council did not take any final votes at the retreat. Instead, by consensus they directed staff to return with model runs and materials showing: (1) a stormwater fee increase option to replace the $200k transfer and the projected revenue effects; (2) scenarios for moving Walgreens lease revenue to the general fund vs. retaining it in CDRA with illustrative uses; (3) a side‑by‑side parks maintenance analysis (contract vs. in‑house vs. rebid); (4) compensation scenarios focused on a 3–4% range and the resulting budget impacts (including benefit assumptions); and (5) a risk/cost projection and timeline for the town‑center options and the Bangor‑Highland project. Staff was directed to prepare public‑facing materials to explain tradeoffs ahead of required notices and the June/August schedule.

What to watch next: staff returns with the modeled budget options and an impact schedule in time for council direction on an interim budget and (if chosen) the formal truth‑in‑taxation advertising steps.