As annual tax revenues came in this spring, the numbers demonstrated a startlingly positive outlook. Utah's cities and towns, with the exception of resort and oil towns, made millions from sales tax revenue. That profit, combined with an infusion of federal funding, is allowing cities to invest in one-time projects and cover their payrolls.
What it doesn't allow for, a 2News investigation found, is any tax relief for Utahns.
The Last One Standing: How an Artisan Pizzeria Survived the Pandemic
“My three neighbors are all restaurants and they went out of business. So there’s four of us and I’m the only one that’s still here," said Jared Nieswender.
The owner of Mozz, an artisan pizzeria in downtown Provo, says he had to lay off his entire staff last year. He, his wife, and his chef kept the restaurant open, offering only takeout.
The financial consequences were devastating.
We lost between 60 and 80 percent of our revenue.
Without PPP and grant money, Nieswender claims his business would be shuttered like many of his neighbors along University Avenue.
Digital Exclusive: Mozz Owner Opens Up About Restaurant Worker Vulnerability During COVID
“They gave us some heating lamps to put on our patio so that we could still try to do some outdoor seating," Nieswinder said, adding that he didn't expect anything one way or the other from the city.
“Other than that though, there wasn’t too much from the city that I’m aware of. At least that directly affected me.”
While Businesses Flounder, Local Governments Invest and Expand
Both the state Legislature and city councils around the state actually saw better-than-anticipated numbers during the pandemic," says Cameron Diehl, executive director of the Utah League of Cities and Towns.
A 2News investigation found while local businesses closed and Utahns lost jobs, cities made millions of dollars in profits and gave their employees raises. They also awarded bonuses.
Utah's 249 municipalities tightened their budgets last year in anticipation of record losses, Diehl says.
Sales tax revenue typically makes up about 30 percent of a city's general fund. Unlike property taxes and other stable revenue streams, sales tax fluctuates depending on the economy.
2News Investigates learned, in Utah's major cities, sales taxes revenue didn't plummet during the pandemic. Instead, revenue boomed because Utahns were buying goods online.
How One Mayor Sliced a City Budget
“I first and foremost wanted to ask you, if you could take us back to last year, how did the city prepare for the potential economic shortfall related to COVID?," asked 2News Investigative Reporter Wendy Halloran.
I use the term, surgical.
Provo Mayor Michelle Kaufusi says she didn't lay off or furlough anyone. Instead, she implemented a hiring freeze.
My directors went to work, I asked them to cut 1.5 percent of their budget except for fire and police.”
According to the mayor, Provo ultimately made money from sales tax revenue during the pandemic.
We were up 8.3 percent year-to-date, and a year ago this time we were at 5.6 and two years, at 3.2. We have seen this trajectory moving upward.
The majority of the CARES Act money Provo received went to police and fire payroll.
The Financial Success of Utah's Cities: A Breakdown
2News Investigates discovered the city also gave 2.5 percent merit raises to its employees. Provo wasn't alone. Salt Lake, Ogden, and St. George gave millions of dollars in merit raises to city employees, too.
In addition, Utah's cities received millions of dollars in CARES Act funding.
Through public records requests, the 2News Investigative Team discovered Provo got $8.4 million in CARES Act funding. St. George and Ogden received $7.6 million and $7.4 million, respectively. Salt Lake City was given by far the most at $19.2 million.
The Utah League of Cities and Towns confirmed all municipalities in Utah received some amount of CARES Act money, one of only a few states where that happened.
We did not turn a single business down," Kaufusi adds. "Any business that applied got some CARES Act money.
Cities and towns can't use federal funding from the CARES Act or the American Rescue Plan to directly or indirectly cut taxes. They can, however, use the money to provide other forms of relief, particularly for businesses.
2News Investigates found other cities around the country, such as Albuquerque, Houston, and Jacksonville, Florida did offer pandemic relief, including city-funded stimulus payments to residents. No such payments were offered in any of Utah's cities.
Kaufusi defends the merit increases, arguing it was a responsible move.
If I needed to dip into my rainy day fund, I was fine to do that.
“You know, I also would love to see that money invested in the city just for general purposes, beautification, parks and road repair, just whatever,” say Nieswinder.
Provo City told 2News they're planning to use the one-time federal funding from the CARES Act for "generational projects," such as public parks and a new fire station.