State audit: Salt Lake City Public Utilities took on more than $600 million in debt with 'no feasible plan' to repay it
The Legislature's auditor general also found a 2025 change in sewer billing raised average bills for schools, charities and churches by about 110.8%. The city agreed with all recommendations.
Continuing story: Auditing Salt Lake City
A performance audit by the Office of the Legislative Auditor General, transmitted to the Legislature on Sept. 15, 2026, found that Salt Lake City's Department of Public Utilities "has had to take out significant debt, over $600 million to update infrastructure." [1]
The report states: "This debt was assumed with no feasible plan to pay it and future debt off." [1]
The Legislature prioritized the audit in October 2025, and the request pointed to large billing increases for non-residential customers. [1]
Debt and revenue
The audit says that as of 2026 the department is in "the negative" with its income versus its debt payments. [1]
It says the department completed an $850 million wastewater treatment plant in 2026 and expects to need a second plant of similar cost within 10 years. [1]
The city's fiscal 2025 financial report lists, among utility debts at June 30, 2025, $323.2 million on 2022 sewer and storm water bonds, $184.5 million on 2025 utilities revenue bonds, $154.2 million on 2020 water bonds and $128.0 million on a federal utilities loan. [2]
The audit found department leadership had not asked the City Council to consider a property tax for the utilities. It recommended that the department formally ask the mayor and council to consider funding changes, including a dedicated revenue tool supported by property taxes. [1]
It also recommended that, if the current structure cannot provide enough financial stability, the department ask the mayor and council to evaluate other governance models, including an independent water and sewer district. [1]
Sewer bills
In 2025 the department began billing non-residential sewer service as if 70% of the water a customer uses goes into the sewer. [1]
According to the department's data, average sewer bills for schools, charities and churches rose about 110.8% after the change. [1]
The audit cites one customer whose water use rose about 67% while its sewer charge rose about 190%. [1]
Auditors found the department had not shown the 70% assumption was an appropriate billing method, and none of the 10 other cities and districts they reviewed applied a 70% factor to estimate non-residential sewer flows. [1]
Department staff reported a 12% to 13% difference between billing records and revenue in the financial statements, which the audit attributes to discounts, exceptions and manual adjustments. [1]
The city's response
Salt Lake City concurred with the report's recommendations. [1]
Its response says rate studies and financial plans are expected to be finished by June 2027, with impact fee increases planned for early 2027, and that property tax revenue for capital needs will be evaluated. [1]
The city's response also says the current mayor-council structure "can provide sufficient financial stability." [1]
In an appendix, the audit found enterprise funds were used appropriately for the 2100 South road project. [1]
Sources
- Office of the Legislative Auditor General · A Performance Audit of Salt Lake City Public Utilities (Sept. 15, 2026)
- Salt Lake City · FY2025 annual comprehensive financial report
Reporting by The Utah Ledger from the public records above. AI-assisted, checked against those records.