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Entity Staff Report - 7/1/2021CITY COUNCIL OF SALT LAKE CITY 451 SOUTH STATE STREET, ROOM 304 P.O. BOX 145476, SALT LAKE CITY, UTAH 84114-5476 SLCCOUNCIL.COM TEL 801-535-7600 FAX 801-535-7651 COUNCIL STAFF NOTE CITY COUNCIL of SALT LAKE CITY TO:City Council Members FROM: Russell Weeks Senior Policy Analyst DATE:June 15, 2021 at 8:35 PM RE: LIBRARY SYSTEM BUDGET AMENDMENT NO. 2 Reminder: [[Insert a link to View the Administration’s proposal]] NEW INFORMATION The City Council held a public hearing on this item June 8. Three people spoke in opposition to the proposed amendment. Their comments were based on the ultimate locations of property tax revenue. It should be noted that the proposed amendment largely is a bookkeeping exercise required by the Governmental Accounting Standards Board. The item is identical to two items that are part of Budget Amendment No. 9 which the Council also is scheduled to consider at its June 15 meeting. A motion sheet is attached to this staff note. Motion No. 1 – a motion to adopt the proposed ordinance – probably is the most appropriate for two reasons: 1.) Tracking the revenue is required by the Governmental Accounting Standards Board. 2.) Tracking the revenue identifies where a portion of Library Fund property tax revenue is being allocated. ISSUE AT-A-GLANCE This item is a public hearing on a budget amendment for the Salt Lake City Public Library System’s budget for the current fiscal year which ends June 30. The proposed amendment largely is a bookkeeping exercise required by the Governmental Accounting Standards Board – the independent board that establishes accounting and financial reporting standards for U.S. state and local Item Schedule: Briefing: (Written) May 18, 2021 Set Date: May 18, 2021 Public Hearing: June 8, 2021 Potential Action: June 15, 2021 Page | 2 governments that follow the Generally Accepted Accounting Principles – “the rules that encompass the details … and legalities of business and corporate accounting.”1 Council staff has prepared a motion sheet pertaining to the public hearing. Given the circumstances, Motion No. 1 to close the hearing and refer action to a later date probably is the most appropriate. ADDITIONAL & BACKGROUND INFORMATION This item is identical to two bookkeeping items the City Council is considering as part of Budget Amendment No. 9. The items require Salt Lake City to track property tax revenue for the Utah Inland Port and the Salt Palace Convention Center hotel.2 The Council held the second public hearing on Budget Amendment No. 9 at its June 1 meeting. According to the transmittal letter, the Library System is seeking a $270,000 increase to its Fiscal Year 2021 general fund budget, but the proposed increase will in essence track property tax revenue earmarked for the Inland Port and the Convention Center. Like the City, the Library System is required to budget and account for pass-through property tax revenue collected by Salt Lake County and remitted directly to the Utah Inland Port Authority and the Convention Center hotel. According to the transmittal, “Neither of these entities has taxing authority, so the respective governments with taxing authority to which the tax revenues would have gone must show the revenue and a corresponding expenditure in their financial statements as required by Governmental Accounting Standards Board Statements 33 and 77.”3 1 Generally Accepted Accounting Principles, www.accounting.com. 2 The following items are from a City Council staff report by Ben Luedtke and Sylvia Richards, May 4, 2021, Page 5 : A-5: Budgeting for Inland Port Tax Revenue ($ - 0 - Budget Neutral) As part of the City's annual financial audit, the City was informed it needs to budget and account for City tax revenue within the boundaries of the Inland Port. Because the tax revenue is dispersed directly to the inland port, the City does not receive the tax revenue. The City will budget a line item to recognize the tax revenue and a corresponding expenditure account recognizing the pass-through, so City revenue is not overstated. A $500,000 portion of the Inland Port revenue was accounted for in Budget Amendment #7 of this fiscal year. This amendment will account for the remaining $483,242 in anticipated revenue. At the time of writing Budget Amendment #7, the City did not know when actual tax revenue would be determined. The final revenue allocation was received on March 30. A-6: Budgeting for Convention Hotel Tax Revenue ($ - 0 - Budget Neutral) As part of the City's annual financial audit, the City was informed it needs to budget and account for City tax revenue at the Convention Center Hotel. Because the tax revenue is dispersed directly to the convention hotel, the City does not receive the tax revenue. The City will budget a line item to recognize the tax revenue and a corresponding expenditure account, so City revenue is not overstated. This amendment is for the $10,116 in anticipated revenue. The hotel is being built on County-owned property. This means the property was tax-exempt and became taxable with the hotel construction. The GOED Development Board adopted a motion on November 6, 2018 which approved the following incentive package under authority of Utah Code 63N-2-503.5. Approve Salt Lake City CH, LLC for a post-performance, New Convention Facility Development, Incentive consisting of:  Up to 100% of the new incremental State Sales Tax not to exceed $75,000,000 over 20 years  Up to 100% of local (city and county) sales tax and property tax over 25 years  Including conveyance of land from Salt Lake County to Salt Lake City CH, LLC State law includes language to hold the Redevelopment Agency (RDA) harmless for existing debt obligations (bonds). Some hotel increment could be used to meet RDA bond payments if needed in the future. The County is required to provide an annual report identifying tax increment generated by the hotel property. See Attachment 1 for a letter from the Salt Lake County Auditor that provides a breakdown of tax increment revenues being diverted by taxing entity. A-7: Presumption for CARES Act Funding – ($-293,06 3 Memorandum, former Library System Executive Director Peter Bromberg, April 19, 2021.