Retooling the property tax
There are no comments for this page [ Add Comment ]Wednesday, November 28, 2007
Master filmmaker Alfred Hitchcock once said, "There is no terror in a bang, only in the anticipation of it."
That's something Utah's incumbent lawmakers surely understand as the 2008 session of the Legislature approaches, and they look forward to re-election. The scary part of the 2008 pre-election season will be to prevent political death.
At present, two issues dominate. First, they can avoid months of fearful dread if they resist the urge to re-fight the battle that led to their Election Day whipping on the subject of private school vouchers. To begin passing more laws subverting the voters' will on the topic will be political suicide.
Dealing with the other issue, however, will be no simple matter. The sticker shock from this autumn's property tax notices has not subsided. Ad hoc groups of taxpayers are organizing, and if nothing gets done during the 2008 session of the Legislature to remedy infrequent property valuations and the resulting sudden spikes in property taxes, it's likely we'll see lots of new faces at the Capitol in 2009.
Some lawmakers are already at work on reforms. Whether they're being motivated by fear of defeat or by a sense of commitment to help those oppressed by staggering property tax bills, we don't know -- it's probably a little of both, in most cases. Whatever the reason, there are some ideas worth discussing already on the table for review.
It's a sure bet that no silver bullet exists to fix Utah's flawed process. A combination of tweaks will be needed to calm property owners' nerves.
The easiest part of the solution would be to simply disclose all records of property sales. That way, county assessors could more easily, and more promptly, track sales prices -- and, therefore, property values -- in all areas of each county. This would provide a constant stream of vital information, rather than a once-every-five-years shock.
But that doesn't help retirees on fixed incomes, or young couples making modest incomes -- who risk being taxed out of their homes as real estate prices soar.
Some proposals that might help mitigate those price/tax spikes include basing the property taxes on a five-year rolling average of the property's market value. There's also a suggestion to freeze property taxes for those over age 65.
Still another suggestion would force a vote of the people to approve any property tax increase above the rate of inflation. We're not sure, however, if "property tax increase" means new revenue to the county or myriad other taxing entities within the county boundaries, the actual increase of the property tax rate itself, or the average tax-payment increase resulting from all valuations countywide; each definition is significantly different from the others.
Still another proposal would not allow property tax bills to increase faster than the rate of inflation.
This is precisely the kind of problem we elect legislators to solve. Their task regarding this issue is anything but simple. But in the process of crafting legislation to improve Utah's property tax system, they should set as their priorities:
* Shield retirees on fixed incomes and low-income homebuyers from being taxed out of their homes.
* Alleviate spikes in valuations and resulting tax bills.
* Make the process more understandable and the number of taxing entities more easily identifiable for taxpayers.
* Determine what resources are necessary for county assessors to do their jobs more efficiently, and make sure it's possible for counties to provide those resources -- such as the disclosure of prices paid on all property sales.
It'll be a big job. But there's plenty of motivation. If lawmakers don't succeed, there will be agonizing months between the end of the legislative session and political defeat.
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