PROPOSITION 7 - RECREATION, ARTS & PARKS TAX
In Spanish Fork City, we take pride in the various recreation, arts, and parks programs and amenities that are available to our residents, from the Sports Park to the River Trail. As our community continues to grow, so will the needs of our residents.
In order to expand the recreation, arts, and parks offerings of Spanish Fork City, residents will have the opportunity to vote on a proposed tax which is added to the existing sales tax. The proposed tax is called the Recreation, Arts, & Parks Tax, or RAP Tax for short. Here is what you need to know about the proposed RAP Tax in preparation for the November Election.
Spanish Fork City held a public meeting regarding Proposition 7 on Tuesday, October 16. A video of the public meeting is included below.
WHAT IS A RAP TAX?
A RAP tax, which stands for Recreation, Arts & Parks, is a sales tax that is added to the regular sales tax rate. Revenues generated from a RAP tax are reserved for specific areas of focus in a community, such as:
- Cultural Arts Programs
- Recreation Programs
RAP is just one name for this type of tax. Other communities have used other names, including:
- CARE: Cultural Arts and Recreation Enrichment
- PAR: Parks, Arts & Recreation
- PARC: Parks, Arts, Recreation & Culture
- ZAP: Zoo, Arts & Parks
Regardless of the name, this type of tax serves one purpose -- enhance recreation, arts, and parks programs and projects in the community.
Based on sales tax revenues provided by the Utah State Tax Commission, a RAP tax in Spanish Fork would have generated $491,000 in FY 2017 and $568,000 in FY 2018.
WHO PAYS THE RAP TAX?
Over the last several years, Spanish Fork City has become much more of a commercial hub in southern Utah County. With additional retail offerings, including restaurants and retailers that draw from a larger geographic area than the Spanish Fork city limits, many individuals from other communities come to Spanish Fork to shop and dine. Using sales data provided by the Utah State Tax Commission, it is estimated that between 41 and 52 percent of all sales in Spanish Fork City are from individuals who do not reside in Spanish Fork City. In other words, nearly half of the funds that would be generated by the RAP tax would be from nonresidents shopping in Spanish Fork City.
Additionally, numerous cities in Utah County and throughout the State already have a RAP tax; therefore, if you shop in these communities, you have paid the RAP tax. Some of these communities include Provo, Orem, Payson, Lindon, Salt Lake County, and Washington County (St. George).
WHAT PROJECTS CAN BE FUNDED?
The following is the ballot language for Proposition 7, outlining how RAP Tax funds could be used in Spanish Fork City, in accordance with State Code 59-12-1402.
Shall Spanish Fork City, Utah, enact a local sales and use tax of 0.1% (1 penny for every $10 spent) to help fund recreational amenities and cultural arts facilities and organizations in Spanish Fork City, said tax to be levied for ten years?
- Live theater
- Chorale groups
- Youth Arts
- Theater groups
- Playing fields/courts
- Trails/Bike paths
- Splash pads
- Swimming pools
- Performing Arts Center
Because the fund distribution will be subject to the recommendation of the Citizen Advisory Committee and approval of the City Council, it is hard to say exactly which projects will receive funding. Regardless, the City has several projects that could be priorities for the RAP tax, including but not limited to:
- All Abilities Park
- After-School Programs
- City Park Improvements
- Dog Park Amenities
- Improved Arts Programs
- Community Theater
- Children Programs
- Indoor Aquatics Center
- Indoor Arena at Fairgrounds
- Pool/Splash Pad Expansions
- Reservoir Amphitheater/Stage
- Rocky Mountain Power Trail Corridor/Other Trail Connections
- Senior Center Improvements
HOW ARE FUNDS DISTRIBUTED?
- A citizens’ advisory committee or commission would be formed
- Committee would accept and review funding requests, such as:
- City Parks projects;
- City Cultural Arts projects; or
- Appropriate 501(c)(3) grant applications
- Committee makes recommendation to the Council for distribution each year
If you have any questions that you would like us to answer about the RAP tax, please submit your question below.
Why do we need a new tax to fund RAP when we have not needed it in the past?
At Spanish Fork City, we take pride in the various recreation, arts, and parks programs and amenities we offer our residents. However, as our community continues to grow, so will the needs of our residents. The RAP Tax would enable the City to provide more for our residents than we have been able to in the past.
Will any of these funds go toward the library?
The funds generated by the RAP Tax could not be used for a new library building; however, they could be used for some library amenities and programs that fit within the RAP Tax ballot language.
What portion of the tax goes to pay city officials or those on committees?
None of the funds generated could be used to pay city officials or members of the volunteer advisory committee. The funds could, however, be used to fund new positions associated with new programs.
What purchases does the RAP Tax apply to?
The RAP Tax would be applied to any purchase that is subject to sales tax. The Utah State Tax Commission has information regarding which items are either exempt from sales tax or have a sales tax rate reduction (https://tax.utah.gov/sales/food-rate). These items would not be subject to the RAP Tax.
Would the tax apply to things such as vehicle sales? For example, how much would be paid in RAP Tax for a vehicle purchase?
The RAP Tax would be applied to any purchase that is subject to sales tax, including auto sales. There are some items, including groceries, that are either exempt from sales tax or have a sales tax rate reduction. These items would not be subject to the RAP Tax.
The RAP Tax rate would be 0.1%. In this example, this would equate to: $40,000 X 0.001 = $40. When calculating what the RAP tax would be on a specific purchase, be sure to enter the rate as 0.001 in your calculator and not 0.1 because it is a percentage. If you enter 0.1 as your rate in the calculator, it will calculate the rate as 10%. In short, when converting a decimal to a percentage, you have to add 2 decimal places.
We have included a calculator on this page to help calculate what the RAP Tax would be for a specfic purchase amount.
Can these funds be used to build a rec center?
Yes, RAP Tax funds could be used for a recreation center; however, this is very unlikely. For example, the 2015 Life Center proposal would have had a yearly debt service payment of $2.8 million. Utah State Tax Commission data suggests that the RAP Tax would have generated $568,000 in FY2018; therefore, if all the RAP Tax funds were put toward a recreation center, they would not be sufficient to cover the full cost. Furthermore, in this scenario, no other funds would be available to fund new recreation, arts, and parks programs.
Will the RAP Tax be used for the arts?
Yes, the RAP Tax funds will most definitely be used for the arts.
Are the funds going to be allocated in percentages?
Funds will likely not be distributed by percentages; rather, a citizen advisory committee will review fund requests submitted by the Parks & Recreation Department and eligible 501(c)(3) organizations, and will make distribution recommendations to the City Council. The City Council will review the recommendations and make a final determination for how the funds will be allocated.
How long will the tax last?
State law (59-12-1402) dictates many components of the RAP Tax, including the length of the tax and the rate. A RAP Tax is levied for 10 years. After the 10 years, the City can propose to reauthorize the tax for an additional 10 years by placing it on the ballot again. Cities that have reauthorized the RAP Tax generally have had a higher pass rate during the reauthorization vote.
Will the rate increase?
State law sets the RAP Tax rate at 0.1%, and does not give cities the ability to change that rate; therefore, Spanish Fork City cannot increase the rate.
How does the RAP Tax affect the City's General Fund?
Every year, the City spends varying amounts on capital projects (e.g., infrastructure). A portion of these expenses are for recreation, arts, and parks projects. The RAP Tax funds could be used to pay for these projects, freeing up funds to be used on other capital projects (for example, a new fire station). Regardless, the intent of the RAP Tax is to increase the annual funding for recreation, arts, and parks.
Do impact fees cover the costs for RAP?
The City already charges impact fees for all new construction and a recreation impact fee is one of those. Those impact fees fund some of the new parks but cannot be used to add a new amenity. Furthermore, impact fees can only be used for the initial costs of a facility and not the ongoing operational costs.
Likewise, public safety impact fees can be used to build a fire station but they cannot be used to operate it.
What happens if the County institutes a RAP Tax?
What would happen if the County institutes a RAP Tax would depend on whether or not Spanish Fork residents pass the RAP Tax in Spanish Fork.
If residents pass the RAP Tax in Spanish Fork, and in a subsequent year the County passes a RAP Tax, Spanish Fork City would keep its RAP Tax and would not be subject to the County RAP Tax. In this scenario, the County RAP Tax would only be levied in areas of the County that do not have a RAP Tax. Likewise, funds generated by the County RAP Tax could only be spent in those same areas.
If residents do not pass the RAP Tax in Spanish Fork, and the County subsequently passes a RAP Tax, then purchases in Spanish Fork City would be subject to the County RAP Tax. Funds generated by a County RAP Tax would be shared by all of the county communities that are subject to the County RAP Tax; however, Spanish Fork City would have no control on how the funds are distributed.
How much of the current sales tax does the City receive?
The current sales tax rate in Spanish Fork City is 6.75% This is distributed as follows:
State of Utah: 4.70%
Spanish Fork City: 1.00%
Utah County: 0.25%
Mass Transit: 0.25%
Mass Transit Fixed Guideway: 0.30%
Do increased sales tax revenues cover the costs for RAP?
Yes, it is true that our tax revenue grows as the community grows. It is generally believed that revenue growth covers the costs to maintain the level of service; however, this typically isn’t the case. For example, additional fire and EMS facilities and crews are needed to maintain our existing service levels (i.e., response times); however, the annual revenue growth is not sufficient to meet these needs, as well as growth demands for all other city services. Not only does revenue growth not keep up with service demands created by the growth, it also doesn’t allow the city to increase the level of service. The RAP Tax would enable the City to increase the level of service for parks and recreation while also freeing up some General Fund money for other service needs (e.g., fire and EMS).
Why pursue the RAP Tax route rather using property taxes?
One benefit of the RAP Tax is that Spanish Fork residents wouldn't pay the full cost as they would with a property tax rate increase. For example, if a property tax rate increase were used, residents would put in $1 to get $1; using the RAP Tax, residents would put in $0.50 and get $1 because non-residents shopping in Spanish Fork would contribute the other $0.50. This is because about 52% of all sales in Spanish Fork City are from individuals who do not live in the City, according to data from the Utah State Tax Commission.