Helping Keep Neighborhoods Safe with a Tax Note Deal

>>Every day we trust our local police departments to help keep our roads [Sirens] safe and our neighborhoods free of crime. Recently, the elected officials of Salt Lake County made the decision to fund police and fire departments with property taxes, helping ensure community safety is top priority. >>Johnathan Ward: Without police force, we are subjecting ourselves to all sorts of crime, lawlessness, everything that we don’t want to have happen potentially could happen. >>The Unified Police Department provides law enforcement service and covers all of unincorporated Salt Lake County, Riverton, Herriman, Holladay, Midvale, and Taylorsville. [Police radio] >>Officer: Someone pulled a gun on a complainant at the smoke shop. Not a robbery. Complainant’s an employee. >>Historically, local law enforcement within unincorporated Salt Lake County was funded with a mixture of property of taxes and sales tax. In 2010 the Salt Lake Valley Law Enforcement Service Area, one of the members of the Unified Police Department, also implemented a police service fee to those people and businesses within the unincorporated areas of Salt Lake County. According to county officials, the implemented fee was very unpopular with the citizens and it didn’t cover all the expenses of the police department. Switching from a fee-based funding program to a property tax program was the alternative solution, but a property tax-funded service area also had its challenges. County officials relied on their financial advisor, Johnathan Ward of Zions Bank Public Finance, to help them work through the challenges and concluded they could fund their operating expenses through a tax note deal. >>Johnathan Ward: Tax notes are just short-term borrowings. They’re done for deficit purposes, meaning a client is going to run out of money and they need a little infusion of cash. The money will be used to pay for operating expenses. It will be the officers’ salaries, their benefits, the vehicles they drive in, the lighting, the sewer, really any operating expenses that are incurred by UPD. [Officer talking to witnesses] >>In the case of the Salt Lake Valley Law Enforcement Service Area, with the elimination of the law enforcement fee, the timing of the receipt of funds for operation changed. Instead of receiving fee income on a monthly basis, the funds would be delivered at the end of the year when property taxes are collected. This left a cash flow shortage during the first part of the year of about $21 million. By selling two series of tax notes, they will improve cash flow and make sure that the Unified Police Department can continue to operate and provide services for the next year. Since UPD is a full service provider, their annual budget is larger because they provide unique services to the citizens in its area. Salt Lake County Sheriff Jim Winder agrees that not all law enforcement agencies are created equal. >>Jim Winder: If you call in an emergency, a uniformed officer in a car would come to your house, handle the call, fill out a report, turn the report in. That’s limited services. A full service police department is one that can provide all of the additional services. If you or a family member, God forbid, is the victim of a *** assault for example, in the Unified Police Department your case is not referred from a patrolman to just another investigator. Your case is referred to a specialized investigator in *** assault, juvenile *** assault , homicide, violent crime, domestic violence, robbery, burglary, etc. >>The elected officials of SaltLake County made the decision to fund police and fire departments with property taxes, so they are less likely to fall short on funds. >>Kerri Nakamura: It doesn’t get a lot of big increases, doesn’t get lot of big decreases, and so there is consistent funding that they can count on year in and year out to provide that basic, core, governmental services that we need to provide as municipal governments. >>Jim Winder: I, of course, am extremely proud. I have been with the organization for 26 years and I have seen the agency change, I have seen it evolve into something that was really in a downward trajectory, from a business model stand point, to something that is truly growing and changing the face of law of enforcement, not only here in Salt Lake County, but really nationally. >>Kerri Nakamura: We don’t want ever to be in a position again where, if the economy goes south and we lose sales tax revenue, we have to look at the possibility of laying off police officers. You can pull back on a capital project, you can say “you know, we are not doing that street repair this year,” or “we are not going to pave those sidewalks this year. We are going to wait until some sales tax comes back in and we have more money.” But when you take a police department or a fire department, where the budget largely funds the people - the people who provide the services- in the Unified Police Department 85% of the budget staff is people, it’s the salary, the benefits, the equipment to support those people- and so you really can’t let that budget rise and fall with the economy the way you can a budget that isn’t quite so people-intensive >>The $21 million tax note deal will help cover operating expenses for the Unified Police Department and will be paid back in full with property taxes by December 2012. By operating this way, the police officer s can keep getting paid while continuing to keep our neighborhoods safe.