Tuesday, November 30, 1999
RE: The 2000 Taxpayer Protection Plan.
CONTACT: Greg Fredde, Vice President, 972-8814 (cell 550-8390)
Taxpayers Association Unveils
“2000 Taxpayer Protection Plan”
|On the deadline for payment of state & local property taxes, the Utah Taxpayers Association unveiled its 2000 Taxpayer Protection Plan. “This plan, if approved by the legislature and signed into law by the Governor, will provide taxpayers in Utah with critical protections against unwarranted and unnecessary property tax increases,” according to Greg A. Fredde, Vice President of the Utah Taxpayers Association.
|The plan includes three components aimed at protecting taxpayers from rising property taxes and providing taxpayers with a direct voice in their taxing future. The 2000 Taxpayer Protection Plan includes three components: (1) voter approval of all future property tax increases; (2) a reduction of local tax rates to prevent a permanent tax windfall resulting from changes in motor vehicle assessments in 1999; and, (3) changes to eliminate delays — some up to one year — in issuance of commission or court mandated property tax refunds resulting from over assessments. The latter two bills have been adopted by the Revenue and Taxation interim committee as committee bills. A bill requiring voter approval of property tax increases was narrowly defeated by one vote in the interim committee. “These components, taken together, will make Utah’s property tax system less burdensome and less onerous for taxpayers,” Mr. Fredde said.
The 2000 Taxpayer
Permanent Public VoteFor three of the past four years, Utah voters have had a direct voice over property tax increases through temporary voting requirements. “If taxpayers have learned anything this year, it is that their pleas not to increase property taxes largely fell on deaf ears in 1999,” said Mr. Fredde. “While Utah’s Truth-in-Taxation law has been effective in limiting escalating property taxes, Utahns are in need of additional protection,” Mr. Fredde continued.
For three of the past six year, Utah voters have had a direct voice over property tax increases through temporary voting requirements. “The Taxpayers Association belives that a permanent public vote on all proposed property tax increases will provide taxpayers with the protection they need from unnecessary or ill-conceived proposals,” Mr. Fredde said.
|In fact, based on previous experience, it appears that the existence of the voting requirement will reduce the number of proposed tax increases.In 1994, when there was no voting requirement, 44 taxing entities proposed property tax increases. In 1995 and 1996, with the public vote requirement in place, only 11 and 12 taxing entities proposed property tax increases, respectively. In 1997, when the public vote requirement expired, 45 taxing entities proposed increasing property taxes. In 1998 the temporary, one-year vote requirement resulted in only 20 taxing entities proposing property tax increases, three of which had received prior voter approval. Finally, in 1999 with the expiration of the one-year voting requirement, 51 taxing entities proposed tax increase totaling over $75 million. “It is apparent that a permanent voting requirement on all property tax increases will provide taxpayers with additional protection from unnecessary tax increases,” noted Mr. Fredde.The call for additional taxpayer protections follows an expected record increase – approximately $133.4 million – in property tax revenues in 1999. “Over half of this year’s increase – approximately $75 million – is due to property tax increases by 51 taxing entities,” Mr. Fredde said. An additional $16.2 million is due to a tax shift from motor vehicles to real property due to a recent legislative change on how vehicles are assessed, Mr. Fredde noted.
|Utah would not be unique in requiring voter approval of property tax increases. In at least 16 states, voter approval is required for taxes to exceed their respective limits. In at least three states, authorization to exceed the levy requires a 2/3 majority vote.
|Local taxing entities worry that a public vote on all proposed property tax increases would significantly limit their ability to meet growing needs. While a permanent public vote would be a significant hurdle, history demonstrates that it is frequently achieved. “Each year, Utah voters authorize millions of dollars in tax increases through general obligation bonds,” Mr. Fredde observed. “Between 1992-97, voters approved 31 of 33 capital facility general obligation bonds for education alone totaling over $1 billion.”
|The Taxpayers Association believes the advantages of a permanent public vote are significant and that it will provide taxpayers with additional protection against unnecessary tax increases. “Many property owners, when they receive their property tax notice, will wish they had been allowed a more direct voice in setting their property tax rates,” Mr. Fredde said. “We hope that this year the legislature will grant that voice.”Preventing a Permanent $5.5 Million Property Tax Hike
The second components of the plan would require the Tax Commission to reduce local property tax levies to prevent a permanent tax hike resulting from recent changes in motor vehicle assessment practices. “As a result of a Tax Commission ruling, local governments were allowed to automatically increase their tax levies in 1999 by a combined $5.5 million as a result of ‘anticipated new growth’,” Mr. Fredde said. “The Commission’s ruling is contrary to intent of the bill’s sponsor and the intent of the Utah Legislature, and thus should be corrected,” Mr. Fredde continued.
The $5.5 million ‘new growth adjustment’ is part of an estimated $16.2 million property tax shift from motor vehicles to real property. The shift follows a 1998 legislative change which scrapped the practice of assessing vehicles based on market value and adopted a uniform assessment based on the vehicle’s age. The legislation allowed local governments to increase their property tax rates by the amount of any loss of motor vehicle revenues resulting from the change. As a result, the Tax Commission increased certified property tax rates in Utah in 1999 by $16.2 million.
Eliminating Unnecessary Delays in Issuing Property Tax Refunds
Due to a quirk in legislation passed last year, some property owners who have successfully appealed their property value have been forced to wait for a tax refund up to one year. “This unnecessary delay frustrates taxpayers and costs local governments additional interest costs,” noted Mr. Fredde. Technical changes in the law will allow local governments to issue refunds immediately and still reserve the right to impose a judgment levy to reimburse government coffers at a later time if needed, Mr. Fredde said.
“These proposed changes are a win-win situation for taxpayers and local governments alike,” Mr. Fredde noted. “It will ensure taxpayers receive timely refunds while provide local governments with additional budgetary flexibility,” Mr. Fredde continued.