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Utah’s Property Tax Truth-In-Taxation Law Is Threatened At Home While It Becomes A Model For Other States

Utah’s Truth-in-Taxation (TnT) law has been a shining example for the nation, and has saved Utah taxpayers billions in property taxes since it was enacted in 1985. Since its passage, Utah taxpayers have been protected against rampant and runaway property taxes resulting from government overspending while other states continue to crank their property tax burden higher and higher. Unfortunately, local taxing entities and a few legislators are conspiring to gut the taxpayers protectionism in the law at the same time a conservative group of state legislators makes Utah’s TnT model legislation.

TnT provides the needed sunshine and transparency into the process of proposing property tax hikes by keeping taxing entities accountable to their taxpayers. Legislative bodies and local taxing entities are required to go before their taxpayers through a dedicated public hearing and make their case to increase property taxes over what they received the previous year plus new growth (new rooftops). Surprisingly, no taxing entity is restricted in the amount they can raise taxes each year. There is no prohibition against taxes being raised. They simply have to do it in the open and try to justify to their taxpayers why the increase is needed. Since the passage of TnT, Utah’s rank among the fifty states for highest property tax burden has dropped from 24th to 36th in the nation. Even still, Utah’s property tax revenue has grown faster than inflation and population over the last thirty years.

This year at the American Legislative Exchange Council (ALEC) Annual Convention, attendees were briefed by Utah Senate President Stuart Adams and Senator Deidre Henderson regarding Utah’s unique and protective property tax system. Following their presentation, ALEC adopted Utah’s Truth in Taxation law as model legislation and urged other states to follow suit. ALEC recognized that Utah’s TnT law “provides a solution to taxpayer unrest from ever-increasing property taxes”.

Despite the enormous success of TnT, there has been a constant drumbeat to erode and destroy them. Virtually every year before the legislative session, during the legislative session and throughout the year there are efforts to erode or even wipe out TnT. Some elected officials claim that the process is “too hard” and plead for relief from having to step into the light and make their case to taxpayers. 

The common theme is to build automatic “inflationary” raises so that elected officials can avoid facing the music and put annual property tax hikes on autopilot. Another tactic is to “freeze” the rate so that when property values increase property taxes rise instead of having the rate float down, which it does under TnT to offset the increased values and result in the same amount of taxes being collected. Both tactics strike at the heart of the TnT law and would make it meaningless.

Upside Versus Downside

One other factor that proponents of changing TnT seem to forget is the stability that Truth in Taxation provides to property tax revenues. When sales taxes and income taxes are plummeting in bad economies, because of the way TnT works, property tax revenues are held steady. For example, in the great recession of 2008 to 2010, income tax revenue in Utah dropped 19% and sales tax revenue dropped by 24%. Meanwhile, property taxes held perfectly steady, saving the bacon of counties, cities and school districts that rely on property tax revenue. Property taxes held steady because under TnT, the certified tax rate guarantees a taxing entities previous years property tax revenue plus new growth.

So, it would be wise to remember that since there is no downside in bad economies for the property tax collected by taxing entities, requiring sunshine and transparency for the ability to raise it makes perfect sense.

As the 2020 legislative session approaches your Utah Taxpayers Association will once again be watching closely to make sure policy makers don’t destroy the best property tax system in the nation by trying to “freeze” the rate to sneak in automatic tax increases under the guise of inflation or a desire to avoid public scrutiny and sunshine.



One Response to “Utah’s Property Tax Truth-In-Taxation Law Is Threatened At Home While It Becomes A Model For Other States”

  1. David Ralston says:

    I support keeping the TnT law in place to maintain accountability in the process.

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