Modernizing Truth-in-Taxation
Truth-in-Taxation has been in place in Utah since the 1980s. It has played a significant role in keeping Utah’s property tax burden low and has limited government spending. As noted in previous newsletters, the Truth-in-Taxation system has moved Utah from being above average in property taxes in the early 1980s to one of the lowest in the nation when comparing property tax burdens to other states.
The key is the public involvement the process brings.
When a governmental entity (such as a school district, county, or city) decides to increase property taxes, it triggers a public hearing before the increase can go into effect. Notices are mailed to every property owner containing the date, time, and location of the public hearing, along with information on the increase. There was also a requirement for entities to publish this information in the newspaper, but that has been discontinued as physical newspapers are now difficult to find.
In the past, these meetings have been effective in halting property tax increases and in dramatically limiting the amount of money the government collects. The written invitation to every property owner to hear why the government wanted more money was often enough to keep spending and growth in check.
However, over time, the government has become more sophisticated in its budgeting process. Many taxing entities now hold “retreats” with their elected officials to discuss budget priorities before any public budget meeting is held. They generally begin creating the budget in public meetings starting in April and May, approve a preliminary budget, and then adopt a final budget by the end of June. If they are seeking a tax increase, they must hold a Truth-in-Taxation hearing in August.
This is all fine and well, but it is largely one-sided. The government begins shaping the budget as early as the winter before a Truth-in-Taxation hearing is held in August. The public, unless they regularly check council or school board agendas, often does not know an increase is coming until they receive their property tax notice in July.
A number of legislators at the State Capitol want to tweak, change, or alter Utah’s Truth-in-Taxation process. By and large, they are responding to constituents’ concerns that taxes are rising in their areas. The ideas range from minor adjustments to encourage more citizen participation to major overhauls.
One idea worth closer examination comes from Rep. Tom Peterson, R-Brigham City. Rep. Peterson is proposing that cities, counties, and school districts notify taxpayers six months in advance if there is an intention to increase property taxes. This would give residents the opportunity to be involved in the budgeting process from the beginning instead of only at the end.
This proposal puts the onus on taxpayers to attend budget hearings in the spring and early summer, sharing their views with elected officials while the budget is still being crafted, rather than showing up in August to oppose it after all the work is done.
There are likely details of this idea that need to be ironed out, but it is a step in the right direction toward modernizing Truth-in-Taxation. It invites the public to be more involved and better informed. It does require taxpayers to play the “long game” and remain engaged in the budget for several months rather than just one night. But I believe better-informed taxpayers will produce better results for everyone involved. We look forward to working with Rep. Peterson and the many stakeholders on this issue in the coming months.