by Howard Stephenson

By November 30 Utah property owners are required to have paid their property taxes. Many taxpayers have seen their property values increase significantly on the tax rolls as county assessors work feverishly to keep values current with Utah’s booming real estate markets.

Utah statewide property tax revenues are expected to surpass $1.9 billion in CY2005. The Utah Taxpayers Association bases this estimate on Tax Commission data for assessed valuations and adopted tax rates by all Utah school districts, counties, cities, towns, and special service districts. This estimate includes locally assessed real and personal property, centrally assessed property, and automobile fees-in-lieu (FIL). Automobile FIL accounted for 10.5% of the total property tax take.

Real and Personal Property

Real and personal property taxes charged for 2005 were $1.7 billion, an increase of 6.0% over the amount for 2004. Since 2000, real and personal property taxes charged have increased at an annualized rate of 5.8%.

The total assessed valuation for real and personal property was $132.3 billion, an increase of 7.4%. The 2005 statewide effective tax rate on real and personal property was 1.288%, slightly below last year’s 1.304% and slightly higher than average since 1999 (1.275%).

Best and Worst

Every year, the Taxpayers Association lists the entities in the five highest and five lowest property tax rates for each type of local government. When all cities are included (not just the 30 largest), the highest property tax rates are found in East Carbon (0.006243), Salt Lake City (0.005368), Ogden (0.004253), Roosevelt (0.004220), and Brian Head (0.004172). The effective tax rate is 0.002566 for all Utah cities. For the thirty largest cities, the effective tax rate is 0.002854.

In addition to local government fiscal efficiency, other factors impact property tax rates. At the city level, property tax rates are impacted by cities’ decisions to impose utility franchise fees. Most urban cities impose this tax while many rural towns do not. City property taxes are also impacted by city sales tax bases, which explain why so many mayors, council members, and city “economic development” directors like to subsidize retail businesses.

School district property tax rates are impacted by enrollment growth rates and assessed valuation per student. Rapidly growing districts with modest to low assessed valuations per student like Tooele, Jordan, Nebo, and Alpine typically have high tax rates.

County-wide Effective Tax Rates

County effective tax rates are determined by dividing total real and personal property taxes charged by all tax entities within a county – including school districts, special service districts, and the county itself – by the county’s total assessed valuation.

Valuation-weighted tax rates vary dramatically from county to county for several reasons. Some local governments operate more efficiently than others. Local governments with low property tax bases, which may be due to low property values and/or low population bases, need to provide the same services as counties with high property tax bases.

However, a high tax base does not guarantee a low tax rate. Millard County (county government only) has the fifth highest property tax rate in the state despite having 1.39% of the state’s property tax base (due to Intermountain Power which pays more than 70% of the county’s taxes) and only 0.53% of the state’s population. Salt Lake City has the highest tax rate of any city in Utah despite having 14.6% of the state’s municipal property tax base and 9.2% of the state’s incorporated population.

County Effective Tax Rates Excluding School Districts

One measure of local government efficiency in providing non-educational services is to evaluate effective tax rates (ETR) excluding school districts while also accounting for assessed valuation per capita (AVPC). By excluding school districts, this measure accounts for the tax burdens imposed by counties, cities, and special service districts. The accompanying chart looks at urban and suburban counties in Utah. ETRs are listed along with AVPC. Indexed effective tax rates are calculated by multiplying each county’s ETR by the ratio of that county’s AVPC to the statewide AVPC. Local governments in two counties – Tooele and Utah – have the distinction of having low effective tax rates while also having low assessed valuations per capita.

Taxes Charged and Average Rates for Types of Local Governments

In 2005, school districts collected 54.9% of all property taxes charged, unchanged from 2004. Counties collected 18.8% of all property taxes, also unchanged from 2004. The share collected by cities and towns decreased from 15.4% to 15.1% while the share collected by special service districts increased from 10.9% to 11.2%.

The accompanying table shows the effective tax rates, revenues, and share of total property tax revenues for the four general types of local governments. Effective tax rates are valuation weighted and are determined by dividing real and personal property tax revenues by total property valuation.