Last month the Utah Republican Party held its organizing convention and took up a resolution dealing with Utah’s property tax system.
Those proposing the resolution argued that Utah’s property tax system has caused “hyper-inflated values and tax assessments on Utahns’ homes” and has made property taxes unaffordable. They went on to threaten that lack of action by the legislature to address this will result in the group pursuing a statewide initiative to change Utah’s tax system.
The sponsors of the resolution called for Utah to adopt a California style property tax system which would result in homeowners paying property taxes based on what they paid for their home and then have their home value adjusted for inflation over time instead of the fair market value assessment that Utah practices.
While well intended, I believe that this resolution is misguided. I certainly do not blame anyone for trying to lessen their tax burden and taking whatever route is available to them to accomplish that. However, attacking Utah’s property tax system and advocating major changes to a system that has produced decades worth of favorable taxpayer results is not the way to go.
According to our records in FY 1980 Utah ranked 23rd highest in the country for property tax collections per $1,000 of personal income at $34.84 per $1,000 of income. That heavy burden caused a dramatic change to the state’s property tax system and eventually the implementation of Utah’s Truth-in-Taxation law. Thanks to those changes Utah now ranks 35th in the country and the burden has dropped to $23.54 of $1,000 of personal income.
In addition to the system change, Utah also has a 45% discount on property valuations for primary residential properties. The discount works like this, for every $100,000 your home is assessed you are only tax on $55,000 of the value of the home. Meaning if your home is worth $500,000 then your property taxes are only assessed against $275,000 instead of the full $500,000.
Opponents of Utah’s current system argue that it is allowing county assessors to do runaway assessments on properties valuing homes for far greater than the fair market value of a home but that is why we have an ability to appeal the county’s valuations. Each resident is entitled to go to the county and make their case as to why their property was assessed wrong and argue for reevaluation. Taxpayers should take advantage of this avenue more often. There are times mistakes can be made and valuations are incorrectly made but without residents speaking up and challenging the values the misvaluations may continue.
The fact of the matter is that no property tax system is perfect. Residents and businesses will always complain their taxes are too high. Tax collectors and spenders will always complain that not enough money is being collected. But the fact is that Utah’s system that was put in place in 1985 has decreased tax burdens on Utahns and protected taxpayers in the state.
That doesn’t mean that there isn’t work to be done to reduce tax burdens on Utahns. Instead of attacking the system taxpayers should look to the major property tax collectors and ask for an accountability of their dollars. For Utah that is the school districts who made up 59% of property taxes collected in 2023.
In FY2014 Utah’s school districts collected about $1.37 billion. Compare that to FY2022 which shows the districts got roughly $2.86 billion, representing a more than an 100% increase in property tax revenue over that time period. In that same time enrollment at Utah’s public schools did not increase by 100%. In fact enrollment in Utah schools has risen only 4.5% in that same period.
This isn’t meant to be an attack on our schools. They are essential to the economic success of our state and we should be ensuring we are putting our students in the best possible situation to succeed. However, we should be asking, are Utah’s school districts properly using the money they are collecting? Are they putting the resources of Utah Taxpayers into the programs that are producing the best results? Are there areas of “fat” in the school system that could be cut?
These are difficult questions to ask and often cause emotional responses. But they need to be discussed. They need to be examined. We call on Utah’s legislature, the state school board, and local district school boards to take the time to examine the budgets of our schools and ensure the burden that is causing residents like the ones at the state Republican convention to call for change are being heard, if we don’t we might just lose the system that has served Utah so well for nearly 40 years.