Utah lawmakers could be toying with property tax policies that could destroy the state's booming economy, at least according to business interests who fear property tax relief for homeowners will mean huge property tax increases for businesses.
In fact, it's high time that homeowners pay their fair share, said Howard Stephenson, who in addition to being a state senator works for the pro-business lobby Utah Taxpayers Association."The less you pay, the less you pay attention," he said, adding that homeowners should realize the "true cost of their government."
Stephenson's comments came Monday during a meeting of the Property Tax Task Force, which was considering a proposed constitutional amendment that would expand the amount of residential property exempted from taxes. Currently, Utahns pay taxes on 55 percent of the value of their homes; under the new proposal, Utahns could pay taxes on as little as 40 percent of the value of their homes.
Business property and second homes do not qualify for the tax exemption.
Sen. Al Mansell, a member of the task force and a prominent real estate broker, also warned that increasing tax breaks to homeowners would "set us up for a real crisis in commercial property," and that owners of such property would be forced to "carry the burden" of homeowners.
But Rep. Ray Short, a longtime advocate for property tax relief for the poor, elderly and those on fixed incomes, said the 60 percent exemption does not go far enough and does not solve the problem of escalating property values resulting in higher property taxes that those on fixed incomes simply cannot afford.
Last February, the Legislature enacted a $146 million property tax-relief package intended to avert massive tax increases caused by property re-evaluations in the current inflationary market. A key component in that tax relief package was raising the residential exemption from 32 percent to 45 percent - the maximum allowed under the Utah Constitution.
If property values continue to rise - and with them, property taxes - lawmakers say they need additional flexibility to avert massive tax increases in the future. The proposal to allow an exemption up to 60 percent does not mean a tax cut, only that lawmakers in the future would have that option.
"We may in the future come up against a similar situation,"
said Sen. Robert Montgomery. "We should have that option on the books and available to us."
The debate over property taxes came just days after county assessors statewide mailed property tax notices that included the tax relief passed by the Legislature. Lawmakers and lobbyists alike bragged about how much less in property taxes they will pay this year, with one lobbyist boasting his taxes were lowered by $700.
That was little consolation to those living in southwest Salt Lake County who saw their property taxes increase by 10 percent to 20 percent.
Sen. Brent Richards, who represents the Riverton area hard-hit by property tax increases, said he favors studying the elimination of the property tax altogether.
Stephenson, who is not a member of the task force, and other business lobbyists argued that tinkering with residential property tax exemptions creates tax inequities by taxing properties in different ways. And that kind of policy lends itself to social engineering about who pays taxes and who does not.
The task force managed to side-step the divisive issue by voting 8-1 to send the matter to the Revenue and Taxation Committee for further debate.