TO: Members in Emery School District

RE: 0.000698 Property Tax Increase

Emery School District officials are proposing to increase school property taxes by 0.000698, or 11.8%. The proposed property tax increase includes an increase in the district's voted leeway and a judgment levy to refund overpaid taxes. The impact on a $75,000 property for the increase would be: residential $28.79, commercial $52.35.

District officials are stating the proposed tax rate is actually a decrease from the current rate. This claim is technically correct but violates the spirit of Utah's Truth-in-Taxation laws. The district's total tax rate is decreasing because the decrease in the debt service levy is greater than the increase in the other levies. However, under Truth-in-Taxation laws, tax entities cannot claim that tax rates are decreasing if the some or all of the decrease in the debt service levy is offset by an increase in the other tax levies. This prohibition prevents tax entities from permanently increasing the base tax rate every time the district issues new debt. School districts should not automatically increase its other levies simply because bonds are being retired.

Utah taxpayers are among the most heavily taxed in the nation, and residents in Emery County residents pay property tax rates that are among the highest in Utah. Utah's state and local tax and fee burden as a percent of personal income is now 9th highest in the nation and is 12.6% higher than the national average. In 2001, Emery School District's property tax rate was 15.6% higher than the state-wide school district average. Emery County's tax rate is the highest in Utah and is nearly double the state-wide average.

When all property taxes are considered - county, school district, city-, the typical Emery county resident's property tax rate is 33% higher than the statewide average.

The decision to impose a judgment levy is a voluntary one made by local officials. While it is true that the school district does not have a choice in repaying the refund, the school district does have complete discretion as to how the refund will be paid. The refund may be paid out of existing revenues, fund balance or surplus funds, or through temporary reductions in other spending. Imposition of a judgment levy is not the only alternative to refund the overpaid taxes.

The Truth-in-Taxation hearing for the proposed tax increase is scheduled for August 13, 2002 at 7:00 PM at the District offices located 130 North Main Street in Huntington..

     *Please make copies of this Tax Alert and distribute them to
       residents of Emery School District.