An Analysis of the Budget of Tooele City and Its Economic Future (2014)

Demographics:

Tooele City’s population is estimated to be 33,762 by July 1, 2016,[1] and is expected to increase to 75,545 by 2050.[2] The median age is 29.2, about a year younger than the median age of the state of Utah. Of residents 25 years or older, 92.1% have a high school degree or higher, 17.6% have a bachelor’s degree or higher, and 3.7% have graduate or professional degrees.

The estimated per capita income in 2012 was $20,967. The percentage of residents living in poverty was at 7.8%, a decrease from 10.2% in 2009.

The estimated median house or condo value in 2012 was $154,039, a 30% increase in value from 2000.  However, in 2012, the median value of these properties was 77% of the median values in Utah as a whole.[3] There is a 5.6% vacancy rate for houses.[4]

A 2007 Utah League of Cities and Town cluster analysis describes Tooele City as a “commercial center”. Commercial centers usually have established downtowns that function as retail centers for both the city and the surrounding communities.  They also are centers of residential property. Tooele City is included along with 16 other cities in the state as a commercial center.  These 17 cities together have a high average commercial property per capita of $6,133. Like other commercial centers, Utah, Tooele City has grown significantly in population.[5]

There are two major commercial property centers in Tooele City: the Ninigret Depot and the Peterson Industrial Depot. The latter includes Utah Fabrication, a heavy steel fabrication company, and 60 other tenants.[6] Tooele City’s employment base is strongly diversified in industry type. From 2008 through 2012, 16% of workers were employed in manufacturing, 15% in retail trade, 10% in construction, 10% in transportation and warehousing, 10% in public administration, 8% in professional, scientific and technical services, and 6% in other services.[7]

Revenue:

Tooele City’s revenue comes mostly from taxes, intergovernmental revenue, and charges for governmental services.

In FY 2013-2014, general sales and use taxes brought in revenue of $4,774,039. General property taxes raised $2,616,037. Franchise taxes amounted to $1,741,918, and the mobile phone tax amounted to $523,811. Other taxes totaled $476,284.[8] As of 2010, Tooele City’s total sales tax rate was 6.35% and its property tax rate was .002111.[9]

Most of Tooele City’s intergovernmental revenue involved road construction. Exactly $2,000,000 came from a grant from the state road fund. A Class "C" Road Fund allotment and interest on that fund amounted to $1,594,476.

The top three charges for public services were for parks and other public property, zoning and subdivision fees, and cemeteries.  These charges raised $733,647, $127,913, and $75,430, respectively.  Other charges for public services totaled $59,403.

Tooele City made substantial transfers to its general fund from other funds, taking $930,058 from the Storm Drain Fund, $400,000 from the Water Fund, and $522,890 from other funds. [10]

Expenditures:

Tooele’s largest expenditures fall under general government, public safety, and transportation and public improvements.

Mayor Dunlavy has described the FY 2014-2015 budget as balanced and conservative. There is no new major capital improvement project planned for this year.  Some ongoing projects include replacing the cemetery’s sprinkler system. 

Tooele City will be giving a 3% cost of living raise to the city’s employees.  An increase of 4% in the cost of the health plan for the employees has been absorbed by the city. A significant amount of unfunded mandates from the state for retirement will be included in the budget. [11]

External Regional Factors:  Some Notes on the Economic Future of Tooele County and Tooele City

Tooele County will be relying more on property taxes in the future.  After laying off dozens of county employees and after reductions in hazardous waste mitigation fee revenues and federal PILT payments, the Tooele County Commission approved last year what was described as a “massive” tax hike of 66%.  This was the county’s first tax hike in 27 years. [12] A couple of major companies are going to start operating in Tooele County. For Airgas, a maker of specialized gases, the Governor’s Office of Economic Development approved for the company in May of this year a post-performance Economic Development Tax Increment Finance incentive of $106,652 over the next ten years.   This is 20% of the net taxes Airgas is expected to pay over that period.  The state of Utah expects Airgas to employ 25 people full time.  Over the next ten years, this may lead to wages of $1,475,181. The state may also benefit from $462,998 in new state taxes over the 10 years. [13]

Outdoor retailer Cabela’s was also given a post-performance Economic Development Tax Increment Finance incentive of up to $693,198 in 2014.  It is hoped that Cabela’s will create 250 new jobs, pay over $30 million in wages over the next 10 years, and pay about $3.4 million in taxes during that time.[14] Cabela’s will be located in Tooele City’s Ninigret Depot, further strengthening the city as a commercial center.

In the most recent edition of Utah Business magazine, Gaylen Webb predicts that Tooele County will increasingly become an industrial zone because of “lots of available land, shovel-ready infrastructure, and a strong transportation grid.” This is partly an overflow effect from Salt Lake Valley being a commercial center but lacking land available for large-scale industrial development. The cost of land suitable for industrial development in Tooele County is less than half the cost of equivalent land in the Salt Lake Valley.[15]

There were great concerns after the U.S. military reduced its workforce at the Tooele Army Depot when the chemical weapons stored in the county were fully destroyed.[16]  However, space left by the military came under the control of a redevelopment agency, and private groups set up the Utah Industrial Depot in the area, later sold to the developer Ningret Group.  To my add my own note, although this particular economic problem seems to have been weathered, Tooele County still depends a great deal on Department of Defense spending and could have serious problems if there was ever a large decrease in the U.S. defense budget.

Another major industrial development in Tooele County is the Miller Business Park, located between Tooele City and Grantsville, with 900 acres of developable land. It is designed as a center for distribution, manufacturing, and motorsports. Grantsville also has plans for an industrial center north of the town.

Ninigret and Peterson Industrial Depots are within 10 miles of a major highway, and already have the necessary electrical infrastructure in place. [17]

[1] US Census Bureau, Quickfacts: Tooele City, Utah, (Washington, DC, 2016), Table, https://www.census.gov/quickfacts/table/PST045216/4976680,00.

[2]  Bateman, Mallory. “A Snapshot of 2050: An Analysis of Projected Population Change in Utah”. Salt Lake City: Utah Foundation, April 2014.  http://utahfoundation.net/uploads/rr720.pdf.

[3] City-Data. Tooele, Utah. 2012. Web. Retrieved 19 July 2014 from http://www.city-data.com/city/Tooele-Utah.html.

[4] City-Data. Tooele, Utah. 2014. Web.  Retrieved 20 July 2014 from http://www.city-data.com/housing/houses-Tooele-Utah.html.

[5] Utah League of Cities and Towns. Cluster Analysis. April 2007.  Retrieved 28 July 2014 from http://www.ulct.org/ulct/wp-content/uploads/sites/4/2013/02/2007-Cluster-Analysis.pdf. 

[6] Tooele City. Demographics.  2012. Web.  Retrieved  19 July 2014 from http://tooelecity.org/city-departments/economic-development/demographics.

[7] City-Data. Tooele, Utah. 2012. Web. Retrieved 19 July 2014 from http://www.city-data.com/city/Tooele-Utah.html.

[8] Tooele City Corporation.  Adopted Budget Form. 19 June 2014.

[9] Tooele City. Demographics.  2012. Web.  Retrieved  21 July 2014 from http://tooelecity.org/city-departments/economic-development/demographic.

[10] Tooele City Corporation.  Adopted Budget Form. 19 June 2014.

[11] Tooele City Council and Tooele City Redevelopment Agency.  Business Meeting Minutes. 18 June 2014.

[12] KNRS. “Tooele County Commission Approves Massive Property Tax Increase”. 21 August 2013

[13] Utah Governor’s Office of Economic Development. “Airgas to Build New Specialty Gas Production Facility in Tooele County”.  8 May 2014.

[14] Utah Governor’s Office of Economic Development.  “Specialty Retailer Elevates Outdoor Products in Utah.”  9 January 2014.

[15] Webb, Gaylen.  “Tooele is a Hidden Gem to the West of Oquirrh Mountains.” Utah Business 31 July 2014.

[16] Moulten, Kristen. “Work Winds Down at Tooele County’s Chemical Weapon Burn Plant.” Salt Lake Tribune 21 Nov. 2011.

[17] Webb, Gaylen.  “Tooele is a Hidden Gem to the West of Oquirrh Mountains.” Utah Business 31 July 2014.