June 12, 2001

RE: Proposed Salt Lake County Property Tax Hike

CONTACT: Howard Stephenson, President, 801-972-8814 or 801-759-3335 or, Wes Quinton, Vice President, 801-972-8814 or 801-550-8390.

Salt Lake County Property Taxes Proposed to Jump –

Tax Commission Decision Could Cost Taxpayers Dearly

Salt Lake County residents, who already are facing a $15.4 million property tax hike approved by outgoing county commissioners last December, could be hit with an additional $15.3 million tax increase because of a decision by the Utah State Tax Commission, according to the Utah Taxpayers Association. The tax watchdog organization says the Tax Commission’s improper interpretation of the bill to end double taxation (SB 168) could nearly double the projected property tax hike in Salt Lake County.

“It is outrageous that a law intended to remove the burden of double taxation on city taxpayers in Salt Lake County could be twisted by the Tax Commission to allow a huge property tax increase instead,” said Howard Stephenson, Utah Taxpayers Association President.

SB 168 was enacted by the legislature in its 2001 general session to eliminate double taxation of police investigative services by the Salt Lake County Sheriff. Cities argued that their own police departments already provided investigative services so their residents should not be taxed for the service again by the county. Salt Lake County was mandated by SB 168 to reduce its revenues by $9.2 million in the General Fund for the cost of investigative services. SB 168 also granted cities authority to increase city property taxes by their proportionate share of the county’s $9.2 million reduction.

“SB 168 allows cities to increase property taxes for the shift between county and city investigative services without going through the normal Truth-in-Taxation public notice and public hearing requirements, but only by the amount which county general fund taxes are cut. Since the county general fund property taxes are actually increasing, cities cannot increase their property taxes this year without going through Truth-in-Taxation,” Mr. Stephenson said. But the Tax Commission says now that, although Salt Lake County’s general fund property taxes are not being reduced, cities don’t have to jump through the hoops of Utah’s Truth-in-Taxation law to impose their own tax hike.

“Instead of getting relief from double taxation, these taxpayers are getting a tax increase from both their city as well as the county. This was never the intent of SB 168,” Stephenson said. “SB 168 was supposed to end double taxation, not impose a double tax hike.”

In December of last year, the outgoing county commission adopted a tax increase of $7.7 in the General Fund and $7.7 million in the Municipal Services Fund.

The Tax Commission argues that even though the county is increasing its property tax revenues this year, it will still be complying with SB 168’s required reduction of $9.2 million. The county must advertise an even larger increase, $9.2 million more, in July than what they advertised in December to demonstrate to taxpayers they will not be taking the cut. However, the final property tax revenue will still be the same as was advertised in December–$98 million. “The Tax Commission believes that because the county will be advertising a tax increase of $9.2 million more, that cities should still be able to increase their revenues their share of the county’s “tax cut” without going through the notice and hearing requirements of Truth-in-Taxation. That is just absurd. Cities were only authorized to take a revenue neutral shift without going through Truth-in-Taxation. This is anything but revenue neutral.”

But that isn’t the worst part of the Tax Commission’s interpretation. They are allowing Salt Lake County’s Municipal Services to increase their proposed $7.7 million tax hike by an additional $8.1 million. The Commission states that SB 168 resulted in ‘Unanticipated Consequences”, that the county could not foresee the impact on their investigative services. So instead of the Commission requiring the county to cut investigative services as required, they allowed the county to simply expand their tax increase to be held harmless. “All said and done, taxes could be increasing on Salt Lake County residents by $15.4 million. How ironic given that this was supposed to end double taxation, potentially resulting in a $9.2 million savings to taxpayers.”

“Cities should come before their residents after people see the impact on their tax notices of the “tax shift” as Truth-in-Taxation intended and justify their need to increase spending.”

The Taxpayers Association has been in close communication with the Salt Lake County Mayor’s office to lobby for a reduction in the tax hikes adopted last December and to encourage the mayor to reject the Tax Commission’s improper application of SB 168. “We are grateful that Mayor Workman is proposing to cut the proposed tax increase of $7.7 million to the General Fund by $1.9. In addition, she is not proposing to increase the county municipal services tax increase by the $8.1 million the State Tax Commission has allowed. Still, the Mayor’s budget is only a recommendation that the County Council has yet to approve,” Mr. Stephenson said.

The Taxpayers Association is also encouraging city councils across the valley to reject the tax shifts allowed under SB 168. If the tax shift is taken, the Association claims that cities must go through the Truth-in-Taxation requirements of public notice and public hearings. “There is no need to take this “free money” without allowing residents to first see the impact of the so-called “tax shift” (read ‘tax increase’) on their property assessment notices in July and August,” Stephenson said.

The Utah Taxpayers Association is considering legal action to prevent cities from imposing this tax hike without complying with the Truth-in-Taxation law and to prevent the Utah State Tax Commission’s interpretation of SB 168 from doubling Salt Lake County’s allowable tax hike.