howardnlby Howard Stephenson

Utah statewide property tax revenues are expected to reach $1.8 billion in CY2004, an increase of $111 million, or 6.6%, from the previous year. This estimate by the Utah Taxpayers Association includes locally assessed real and personal property, centrally assessed property, and automobile fee-in-lieu of taxes (FIL). Automobile FIL accounted for 10% of the total.

Real and Personal Property Taxes

Taxes paid on real and personal property accounted for $1.61 billion, or 90% of the total amount, and increased 6.9% from the previous year. The statewide effective tax rate on real and personal property increased 1.7% from 1.284% in 2003 to 1.305% in 2004. Total assessed valuations increased 5.2%.

School district property taxes increased 7.8% from 2003 to 2004 and accounted for 63% of the total statewide increase. School districts continue to slowly increase their share of total property taxes, taking 54.9% in 2004 compared to 54.5% in 2003 and 53.9% in 2002.

Property taxes imposed by county governments increased 5.2% from 2003 to 2004 and accounted for 14.7% of the total statewide increase. Counties’ share of property taxes has decreased slightly from 19.3% in 2002 to 18.8% in 2004.

City and town property tax revenues increased 5.7% and accounted for 13.1% of the total statewide increase. Cities and towns collected 15.4% of all property taxes in 2004, slightly down from 15.6% in 2002 and 2003.

Special service districts – which include many county library systems and county municipal service districts – are expected to experience a 5.8% increase in property tax revenues in 2004.

Special service districts account for 10.9% of all property taxes in 2004, slightly down from 11.1% in 2002.

Effective Tax Rates by County

County-wide effective tax rates are determined by dividing total property taxes charged by all tax entities within a county – including school districts, cities, special service districts, and the county itself – by the county’s total assessed valuation. The accompanying table lists all 29 Utah counties by effective tax rates. (PUT TABLE OF 29 COUNTY TAX RATES HERE)

Valuation-weighted tax rates vary dramatically from county to county for several reasons. Some local governments are operated more efficiently than others. However, counties and school districts with low property tax bases are expected to provide the same services as counties and school districts with high property tax bases. Nevertheless, a high tax base does not guarantee a low tax rate. Salt Lake City has the highest tax rate of any major city in Utah and collects one-third of all municipal taxes despite having only 10% of the state’s incorporated population.

Every year, your taxpayers association lists the five highest and five lowest property tax rates for each entity type. This year’s “Best and Worst Property Tax Rates” are shown here. (PUT TABLE OF BEST AND WORST PROPERTY TAX RATES HERE)

In addition to local government fiscal efficiency, other factors impact property tax rates. At the city level, property taxes are impacted by cities’ decisions to impose utility franchise fees. Most urban cities impose this tax while many rural towns do not. City property tax rates are also impacted by city sales tax base, which explains why so many Utah cities use RDA subsidies to encourage “economic development” within their cities. School district property tax rates are impacted by enrollment growth and assessed valuation per student. Rapidly growing school districts with modest to low assessed valuations per student like Tooele, Jordan, Nebo, and Alpine typically have high tax rates.