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TAX ALERT!
From The Utah Taxpayers Association
1578 West 1700 South #201, Salt Lake City, Utah 84104 PH 972-8814 FX 973-2324

August 13, 2003

To: All Members in Box Elder School District

Re: Proposed Tax Increase

Box Elder School District is proposing a 3.2% increase above the district’s certified property tax rate. With new growth and other factors, the district’s property tax revenue will decrease slightly due to bond retirement.

Annual Impact of Proposed Box Elder School District Tax Increase
Property   $150,000 Valuation   $300,000 Valuation
Residence*   $9.82 increase   $19.64 increase
 Business   $17.85 increase   $35.70 increase
* Residences receive a 45% exemption under state law. Business properties receive no exemptions.

School district officials are claiming that this year’s property tax rate will be lower than last year’s tax rate. While this claim is technically true, this is misleading and violates basic tax and fiscal policy principles:

1. Under Utah’s Truth-in-Taxation property tax law, property tax rates decrease as valuations increase. This is designed to prevent local governments from getting a revenue windfall simply because valuations of existing property have increased. A decreased certified property tax rate does not imply that taxpayers are receiving a tax cut but rather that valuations have increased.

2. The decrease in the school district’s rate is also attributable to a significant reduction in the debt service levy, which is used to pay bonds approved by voters. Voters approve bonds with the understanding that the resulting tax increase is temporary and will be eliminated once the bond is paid. Bonds are issued to cover one-time expenses, such as school construction and renovation, and are not intended to cover on-going expenses. By trying to recapture the debt service reduction which occurs when bonds are repaid, school district officials are basically intending to convert part of the temporary property tax increase to cover one-time expenses into a permanent tax hike to cover ongoing expenditures.

The Utah Taxpayers Association is especially concerned about tax increases for the following reasons:

1. Utah is currently experiencing severe economic problems. Utah’s per capita bankruptcy rate is highest in the nation and is twice the national average. Unemployment is still at historic highs. Increased taxes only exacerbate these problems and make it more difficult for businesses to hire and keep employees.

2. Utah’s total state and local tax and fee burden as a percent of personal income is 10th highest in the nation and is 12.5% higher than the national average. Higher tax burdens lead to lower long term economic growth.

Box Elder School District will be conducting a Truth-in-Taxation hearing on Wednesday, August 20th, at 6:30 pm at the district office, 960 South Main, Brigham City, Utah .


     *Please make copies of this Tax Alert and distribute them to
       residents of the Box Elder School District.
The Utah Taxpayers Association is a non-profit, non-partisan association working for greater efficiency and economy in government.