The Legislative Auditor’s report on property taxes, presented on April 17th, confirmed what many have long suspected: property taxes are not made equal. They concluded that commercial properties are undervalued, and that many Utah taxpayers are confused by the property tax system, including the Truth in Taxation process.
The valuation of commercial properties is perhaps one of the most controversial issues when it comes to property tax. County assessors have little information on which to base a valuation and, instead of risking long appeals processes, habitually undervalue them. Still, the valuations are appealed more frequently than are residential valuations. This undervaluation then shifts the burden of property tax to residential properties (despite the residential exemption which aims to prevent this).
Efforts have been made to compel commercial properties to reveal their sales data in the hopes of facilitating more accurate valuations. Senator Dan McCay’s SB 30 (2024 GS) would have required the disclosure of the purchase price of commercial properties to be made available to the county recorder. The bill received a 21-7-1 vote in the Senate but was not heard in the House. While various parties have qualms with such a requirement, the Utah Taxpayers Association ultimately supports required disclosure because it will ensure a proportionate distribution of property tax burden. Many taxpayers have been alarmed and frustrated by the volatility and escalation of their property tax burdens; consistent data on commercial property valuations would address both of these issues to some extent.
Utah’s Truth in Taxation law has become model policy across the nation; however, there is still room for improvement. Many taxpayers are confused by the concept that although an entity may not increase their taxes, the taxes they pay may still increase (due to an above-average increase in their property value). Equally, some taxing entities attempt to disguise their tax hikes by claiming that they are simply “holding the rate steady”, when in reality their revenue is increasing because of an intentional hike.
The Legislative Auditor’s report recommends that, “The Legislature should consider creating in statute a template to be used by taxing entities that clearly communicates the intended uses for the increased revenue raised by Truth in Taxation.” This excellent recommendation was reflected in Senator Chris Wilson’s SB 29 (2024 GS) and will enhance the accountability of taxing entities’ increases.
The Legislative Auditor’s report makes many recommendations to improve the property tax system in Utah – from valuations to noticing. With Truth in Taxation hearings coming up shortly, and no doubt a lot of frustration with them, the Legislature would do well to seriously consider implementing these recommendations. Your Utah Taxpayers Association will work to ensure that they do.