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Consultants tell Orem council: fund balance could run out without revenue changes
Summary
Consultants from LRB told the Orem City Council that under baseline assumptions the city's $25 million unrestricted fund balance will be depleted within the coming decade unless the council pursues revenue tools, cost reductions, or both. They urged careful consideration of the certified property-tax rate and other levers.
Consultants from LRB told the Orem City Council during a work session that the city's financial model shows a material, structural deficit under current assumptions and spending requests.
"We cannot sustain the assumptions that we have programmed into the model," Fred, an LRB consultant, said as he walked the council through projections that begin with a $25 million unrestricted fund balance and assume only modest revenue growth. The model showed the fund balance falling to zero and turning negative before 2032 in the baseline scenario that assumes no property-tax action.
The consultants said the city's revenue mix has shifted: property taxes now account for a smaller share of general-fund revenues while reliance on sales tax has increased. Sales-tax receipts have plateaued in recent years (roughly $31.7M—232M over the last three reported years), making further growth risky. LRB recommended that the council consider allowing the certified property-tax rate to be maintained or adjusted upward in order to preserve the city's buying power and service levels.
The consultants described the model inputs and assumptions in detail: 2019—2024 historical actuals, 2025 projected actuals and 2026 budget figures, a planning horizon focused on five years, and line-item inflation and targeted expense escalators (for example, higher personnel pressures in public safety). They also isolated requests for one-time capital and ongoing operating increases that together add millions to the city's baseline expenditures.
LRB noted downside sensitivity in the model: if sales-tax growth remains flat and the city adds operating lines that compound with inflation, deficits widen quickly. They presented a second scenario showing that even absent new ongoing programs, inflation alone erodes the fund balance.
Brandon, a member of the city's finance staff, said staff and consultants will provide the council with the full slide decks and supporting spreadsheets and called the model a planning tool to evaluate options rather than a prescriptive plan.
Next steps noted in the session included more council feedback to staff, additional modeling iterations for different property-tax scenarios and potential one-time bonding options for capital needs. The council did not vote on any change; staff will return with tailored options and the materials needed for public review if the council directs further action.
