Tuesday, July 14, 2020

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Moab, UT

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Moab
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    City has no cash for capital projects

    Featured Stories

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    Doug McMurdo
    Doug McMurdo
    Editor Doug McMurdo reports on news out of the Moab City Center, tourism, courts, change of government and more.

    Operations take 100% of sales tax revenue

    File photo

    There are few problems the City of Moab faces that couldn’t be solved with more money. Unfortunately, there is no more money.

    Soon to retire Finance Director Rachel Stenta at a daylong annual strategic planning session held Friday, March 6 said $1.2 million will have to be cut from the 2021 budget, which begins July 1 in order to break even and balance the books.

    “Sales tax revenue can no longer meet our capital project needs,” she said. “Our reserves are nearly depleted.”

    Every dime of sales tax revenue is committed to operations “and we lack an ongoing revenue stream for capital projects,” she said. “We have no sales tax debt capacity remaining.”

    Stenta said new revenue streams are needed to replace infrastructure, as well. “Our utility rates are too low to sustain both operations and capital projects,” she said. “We have no debt capacity in water and very limited capacity in sewer.” Customers have been told a fee increase is coming and Stenta said a goal of the treasurer’s office is to provide information that helps customers to understand rate increases.

    She said they don’t necessarily leave with “a smile on their face,” but they at least understand why increases are necessary. One reason, she said, is the city waited too long to raise rates. Instead of “adding pennies” on a regular schedule, the city adds a higher rate that leads to sticker shock.

    The city’s debt load is more than $21 million, with more than $15 million of that in its enterprise funds, such as water and sewer. Recreation debt is about $2.8 million followed by housing debt at nearly $1.7 million and sales tax debt of more than $1.5 million.

    Looking forward to the next five years, Stenta said a 10-year financial plan should be made for operations and capital improvements.

    She said the city will have to go to bond to pay for a $1 million payment to the Utah Department of Transportation and reminded Mayor Emily Niehaus and the city council that there was no money to pay for the construction of the Walnut Lane planned affordable housing project beyond the design phase, saying the project has to pay for itself with a “significant portion in grant funding.”

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