Wednesday, July 7, 1999
RE: Utahns to See Increases in Property Tax Bills
CONTACT: Greg A. Fredde, Association Vice President, 972-8814
Taxpayers Face Increased Property Taxes in 1999
Due to recent property tax changes and proposed tax increases, many Utah taxpayers will pay hundreds of dollars more in property taxes in 1999, according to the Utah Taxpayers Association. “The estimated impacts on a $100,000 of residential value range from over $155 in Loa in Wayne County to $9 in unincorporated areas of Iron County,” noted Greg A. Fredde, Vice President. The expected increases are in addition to any increase resulting from a rise in property values.
The significant increase in property taxes are the result of three issues: 1) a $21.7 million shift due to changes in how motor vehicles are assessed; 2) a Supreme Court decision awarding airline property taxes previously allocated throughout the State to Salt Lake County, Salt Lake City, and Salt Lake School District; and, 3) nearly $65 million in proposed tax increases, including bonds and school voted leeway taxes. “The combined impact of these issues pose potentially serious challenges for Utah small businesses and homeowners on fixed incomes,” noted Mr. Fredde.
Vehicle Tax Change Results in $21.7 Million Tax Shift
In 1998, the Utah Legislature approved legislation overhauling the assessment of motor vehicles. The change scrapped the practice of assessing vehicle based on its market value and adopted a uniform assessment based on the vehicle’s age. The change resulted in a significant reduction in vehicle taxes for newer, more expensive vehicles and significantly simplified the assessment process, Mr. Fredde said.
“Many of the legislation’s strongest supporters, including county assessors, argued that the bill would eliminate the administrative headaches of determining a vehicle’s value and would result in increased efficiency,” Mr. Fredde said. Despite promises of improved efficiency and revenue neutrality, local officials convinced the bill’s sponsor to include language ensuring local governments an amount equal to the revenues they would have collected under the previous assessment practices.
“However, our Association argued early in the debate that the proposed change would result in a significant revenue shortfall–over $12 million,” noted Mr. Fredde. Despite these concerns, the legislation was approved.
The impact of the shortfall varies significantly by locality. Taxpayers in Hildale in Washington County will see the largest increase–over $50–while taxpayers in the unincorporated areas of Millard County will see the smallest increase–only $2.23. On average, Utahns will see a $13.38 increase in the property taxes as a result of the $21.7 million vehicle tax shift.
“The shift is particularly damaging to businesses with extensive real property and equipment but few or no vehicles,” Mr. Fredde said. “In addition, businesses do not benefit from the 45% residential exemption afforded residential property and are taxed at 100% of their fair market value.” Moreover, homeowners who drive older vehicles or are reliant on public transportation will also see an increase in their property tax burden, he continued.
Airline Decision Results in a $5.2 Million Shift, $1.9 Million Tax Increase
In April, the Utah Supreme Court ruled that the Tax Commission’s methodology in assessing commercial airlines was unconstitutional, resulting in a $5.2 million property tax shift from rural Utah to Salt Lake County. The decision also resulted in a $1.9 million tax increase on Utah’s commercial air carriers as a result of higher property tax rates in Salt Lake County.
The ruling will result in a loss of tax base in parts of the state which the airlines flew over but did not land. “Consequently, under Utah’s Truth-in-Taxation law, tax rates in those areas will be adjusted upward to ensure taxing entities the same property tax revenues as the previous year,” Mr. Fredde said. Taxing entities in Tooele County will see the largest loss of airline tax revenues, over $620,335, or 4.3% of total property tax revenues. However, taxing entities in Daggett County, while losing $85,149, will see a 9.26% in property tax rates. Taxpayers in Tintic School District in Juab County will see the largest tax shift–$137–as a result of the airline decision. Taxpayers in Piute, Duchesne, and Daggett will see the next largest increase at $53, $49, and $35, respectively.
Taxpayers Face nearly $65 million in Tax Increases
“In addition to increased taxes resulting from the vehicle and airline adjustments, Utah taxpayers are facing nearly $65 million in property tax increases by local taxing entities,” Mr. Fredde said. These tax increases include: nearly $1 million for major Utah cities; $23.1 million for counties; $3 million for major special districts; and nearly $38 for school districts. These tax increases include general obligation bonds, school voted leeways, and tax increases approved by an elected body in 1999. “This explosion in tax increases compounds the challenging already facing Utah taxpayers and is a significant threat to small businesses and homeowners,” noted Mr. Fredde.
(While the Taxpayers Association recognizes that general obligation bonds and school voted leeways are approved by the voters, they have been included to demonstrate the total increase in tax burden taxpayers face.)
Taxpayers in Salt Lake County face three of the largest tax increases proposed this year, Mr. Fredde noted. In December, the Salt Lake County Commission tentatively approved a General Fund tax increase of $18 million and an addition tax increase of $3 million for the County’s unincorporated areas. In addition, Granite School District is proposing a tax increase of $19 million and Jordan School District is proposing to increase its taxes by at least $10.1 million. Together, county and school district tax increases will result in $123 in increase taxes for residents living in the unincorporated areas of Granite School District. Residents in Taylorsville and West Valley will see a $108 increase in taxes.
Residents in 14 of Utah’s 29 counties will not see a tax increase by local taxing entities. All taxpayers, however, will see an increase resulting from the vehicle and airline shifts, Mr. Fredde said.