August 2017 Interim Session Update: What to do about property taxes??

Property Tax Working Group, Utah Tax Review Commission – 8/22/17

When somebody says “fun legislative committee meeting,” what’s the first thought that pops into your head?? Well, obviously Property Tax Reform!!!

During August’s Interim Session, the legislature met to discuss property taxes as part of its broader review of Utah’s tax system. Miraculously, I managed to watch the entire meeting AND stay interested. Spoiler alert, the review did not view Utah too favorably.

Good News! (for those who want tax reform)

Pretty much the entire committee agreed that Utah needs to improve its property tax system.

Sen. Stephenson specifically discussed how current issues such as lack of disclosure, the 45% exemption, and unequal tax effort, all negatively impact the ability to fund education at the state level. As he points out, there’s a large inequality between counties like Tooele, which struggle to pay for schooling, and Wasatch, which has a much different scenario. Kathleen Howell seemed to concur, noting how recently a company which finished a $20 million project right across from USU had their project purchased from the university, subsequently leading to Logan city now losing $240,000 worth of taxes due to our tax system. “Big business, small business, everyone should pair their fair share” she passionately stated. She additionally was frustrated with how many exemptions there are, particularly criticizing how the standard for religious, charitable, and educational services is very vague.

The best part of this meeting was the fact that everyone seemed onboard with reforming the tax code, and seemingly everyone was onboard for good reasons, namely the Utah taxpayers and education.

Bad News! (for those who think that Utah is the best state ever)

Just HOW bad our property tax system really is was made uncomfortably clear. For instance, Sen Stephenson pointed out how our state is 43rd in residential property taxes, consequently harming our ability to fund essential services. Another individual discussed how in the most recent 2016 tax report, our property tax was at an effective rate of .94, which is not good considering that property tax is BY FAR the greatest base (300+ billion).  Tooele county specifically was not painted in a good light, partially because the large amount of federally-owned land in the county pushes the tax rates onto the citizen. All of these problems combined with a 45% tax exemption from the state of Utah makes further reform a must. Some “educational” entities even claim a 501(c)(3) status despite not having any students… Finally, despite the consensus that arose in this meeting, Sen. Stephenson made it clear that “Some districts with highest gain have not been supportive,” showing that reform will still be an uphill battle during the legislative session.

Looking Forward: What to Expect

Curtis Trader made it clear the Governor Herbert expects this to be a long-term project, lasting over at least a few years. In the meantime, we can expect further meetings during this year’s session and the subsequent interim session regarding property tax reforms. So, us raging progressives better not get our hopes up too soon. As a whole, this meeting was a good start for discussing the issue, but there’s still a lot more to be done before seeing any bill for reform is passed anytime soon.

– Maxton Cline, Karen Shepherd Policy and Advocacy Intern

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