Revenue & Taxation
Lehi City is funded primarily through two categories of revenue: taxes and fees. Tax revenue is primarily used to pay for services provided to the public in general such as police, fire, streets, and parks. The City also provides services that benefit specific groups of citizens for which a specific fee is charged
which is intended to pay for all or part of the costs incurred to provide that service. The City follows the revenue policies below:
- The City should maintain a diversified and stable revenue system to shelter it from unforeseeable short-run fluctuations in any one revenue source.
- The City should estimate revenues conservatively on an annual basis to avoid unexpected deficits and to provide a funding source for Capital Project needs.
- The City should minimize the use of one-time revenue to fund on-going services.
- The City should annually review the full costs of activities supported by user fees, impact fees, license and permit fees, and special assessments to 1) identify the impact of inflation, 2) determine that the full long-term service costs are not being subsidized by general revenues or passed on to future generations of taxpayers, 3) determine the subsidy of some fees, and 4) to consider new fees, subject to the review of City Council.
- The City should seek to maintain a stable tax rate.
The above chart shows the seven-year trend for those revenue sources classified as general taxes and as building permit fees. In total, these five sources are expected to comprise 78.4% of the general fund revenue. It is important to maintain balance among major revenue sources. The remainder of this webpage will provide additional information on the major general fund revenue sources used to fund the City’s general government services. User fee revenue information can be found by clicking on the following link. User fees are based on an analysis of how much of the cost should be covered by the fee versus how much should be subsidized by general taxes and revenue. Factors considered in the analysis include:
- How the fees compare with those charged by other cities,
- Whether the service benefits the general public versus an individual user, and
- Whether the same service can be offered privately at a lower cost.
Sales Tax
General sales tax is Lehi City’s largest revenue source at just under 28% of general fund revenue. State law authorizes cities to receive sales tax revenue based on the process described in the chart shown to the right. Normally sales tax revenue fluctuates more with the economy than the other major tax revenue sources.
Property Tax
Property tax is Lehi City’s second largest source of tax revenue accounting for about 28% of general fund revenue. Utah County assesses the taxable value and collects all property tax. Lehi City’s 2011 certified tax rate is 0.2519%. Primary residences are taxed at 55% of the assessed value while secondary residences are taxed at 100% of the assessed value. Lehi City receives about 19% of what Lehi citizens pay in property taxes (see pie chart below).
Normally, property tax revenue tends to stay relatively stable. When compared to other cities in Utah of a similar size, Lehi has maintained a relatively average property tax rate for many years which has helped to mitigate against the need for a significant rate increase in any single given year.
Franchise Tax
Franchise taxes are the third largest source of revenue for the general fund, accounting for 16% of total revenues. State law authorizes cities to collect up to 6% on utilities operating within city boundaries. The table below lists all of the utilities and the amount of franchise tax charged (if any) associated with each type of utility.
Motor Vehicle Tax
A statewide fee is assessed on motor vehicles in lieu of property taxes. The fee is assessed based on the age of the vehicle. This source of revenue accounts for just under 3% of all general fund revenues. The graph on the right shows historical revenue data; while a breakdown of how the Motor Vehicle Tax is assessed is provided below:
