At September’s Interim Committee meeting of the Legislature’s Revenue and Taxation Committee, it was revealed that nearly 40 taxing entities in the state are in jeopardy of not receiving their approved tax increase, despite having voted for the increase and holding a truth-in-taxation hearing.
The reason is that many of these cities, school districts, or special service districts missed one of the required steps in notifying residents within their jurisdictions about the increase. From my understanding of the situation, these mistakes were simply that—mistakes. None of the entities were attempting to avoid notifying the public or to push through a tax increase in the dark of night without notice. Rather, many seemed to have relied on how they had done things in the past without double-checking state code before proceeding.
This has left these entities scrambling for a solution. They have already started their new fiscal year but are now faced with the question of how to proceed. Some, like Draper, have decided to move forward without the additional revenue from their tax increase and will address their needs at a later time. Others are working with the Tax Commission to determine whether they actually met the requirements, while still others are looking to the Legislature to provide a way to correct their misstep and still receive the increase this year.
I am not opposed to a correction path for these governments, but a sense of equity must be included in any fix.
When taxpayers make mistakes on their taxes, the consequences often include monetary penalties, added cost, and additional time to submit corrected forms. In some cases, taxpayers must also pay interest on the money they miscalculated and failed to pay. Taxpayers don’t simply receive a “mulligan” or a slap on the wrist with a warning not to repeat the error.
Local governments should be treated the same way taxpayers are when they make mistakes. They should be allowed to correct the error, but there should also be a penalty assessed or a privilege withheld to ensure accountability for not following state law.
If an entity chooses to move forward with its planned property tax increase this year, it should be required to hold another truth-in-taxation hearing with the proper notices issued. In addition, penalties could include receiving only 95% of the increase, losing the ability to raise taxes in 2026, withholding of certain state funds for a period of time, or limits on how much they can raise taxes for three to five years.
The key here is for the Legislature to strike a balance between how taxpayers are treated when they make mistakes and how local governments are treated when they make mistakes. If the approach is equitable, then we can live with the solution. But a simple “you can have it this year, just don’t do it again” slap on the wrist is not enough.
We stand ready to work with legislators, cities, school districts, and special service districts that have found themselves in this difficult situation. If there are critical needs that must be funded, then solutions should be found. But at the same time, if this requires these entities to further prioritize their needs and stretch their dollars before asking for more from Utah Taxpayers, we welcome and encourage that among all elected officials.
Taxing entities with tax increases on hold (list as of Sep. 22):
Box Elder
Cache School District
Hyde Park
River Heights
Wellsville
Clearfield
Clinton
Kaysville
West Point
Woods Cross
Castle Valley
Iron School District
Eureka
Leamington
Wasatch Peaks Ranch Utility District
Wasatch Peaks Ranch Road and Fire District
Granite School District
Town of Alta
North Sanpete School District
Ephraim City
Fountain Green City
Henefer Town
Oakley
Tooele County School District
Stockton Town
North Tooele City Special Service District
Uintah County School District
Alpine School District
Provo City School District
Springville
Ivins
Harrisville
North Ogden
Roy
South Ogden
North View Fire District
Central Weber Sewer District
Draper