Utah Supreme Court
2011 UT 4, 247 P.3d 371
A threshold question to determine the validity of a local fee is whether the charge is a “fee” or a “tax” A fee is compensation for a service or benefit provided by a government agency, or to defray the cost of regulation. A tax raises revenue for general government purposes, and is not necessarily tied to a specific service or regulatory action.
A municipal fee is entitled to a presumption of constitutionality and validity. A person may overcome that presumption by showing that the fee does not have a reasonable relationship to the cost of the regulation activity.
A fee may be challenged in one of two ways: (1) By showing that the fee is actually a “tax” enacted for the purpose raising revenue; or (2) By showing that the fee is unreasonable because it is disproportionate either to the cost of the service rendered or the cost of regulating the activity.
A local government may use a multi-year approach to determine if a fee reasonably relates to the actual cost of the service or regulation.