Every year the Utah Legislature argues about property taxes: whether big business is paying too much money or paying too little and whether homeowners are going to get hit with an unexpected property tax increase through an unwanted shift in who pays the much-hated tax.
Sometimes there are even special legislative sessions to talk about "centrally assessed properties" and "intangible property vs. tangible property."All this is incredibly boring, and many legislators themselves wonder if they understand it or can figure out how to fix it.
The bottom line is that legislators, who are up for election this year, worry that anything they do, or don't do, will make homeowner taxes go up. They'd probably stick "intangible property" problems in a hat and wear it if it would stop homeowner taxes from increasing. They just want a solution.
Now comes House Majority Assistant Whip John Valentine, R-Orem, a tax attorney in private life, who offers them one.
Valentine says that changing as few as three words in current property tax law concerning "intangible property" definitions would avoid most of the tax shift from big businesses to homeowners and small businessmen, likely to come in 1998.
Whew! That was easy.
Or was it? "My bill doesn't solve all the problems" that occur between locally assessed (homes and small businesses) and centrally assessed firms (big, multicounty businesses such as mines, railroads and telephone companies), Valentine says. "But it solves about 80 percent of the problem."
For homeowners along the Wasatch Front, the current problem didn't matter a whole lot anyway. Recent Tax Commission rulings may have added $20 to $30 to the tax bill on a $150,000 home in Salt Lake County.
Most years, property taxes in urban counties go up that much through minor rate increases coming from the myriad of local governments, school districts and special districts that levy rates on a property or through reappraisal in the hot Utah real estate market.
But legislators and Tax Commission officials alike were upset over the ever-increasing appeals by centrally assessed firms. Delays caused by the appeals caused significant chaos for the entities receiving the tax revenues from those firms. The legislators determined to make policy that stands up in court, rather than dealing later with this or that court decision or appeals ruling.
Valentine's bill was favorably passed out of the House Revenue and Taxation Standing Committee Monday but not before lawmakers questioned the impact it would have on future litigation.
The impact of the controversial WilTel decision handed down by the four-member state Tax Commission in December may be limited by the bill, Valentine said. However, his intent was "not to explicitly overrule WilTel," he said.
Valentine's measure is an alternative to a Senate proposal that would change the Utah Constitution's wording on taxing intangible property. "My amendment goes farther," says Sen. Lyle Hillyard, R-Logan. "Maybe (lawmakers and big businesses) will accept John's as an alternative to mine - and I support John's measure."
Valentine says his idea makes better sense; it's simpler and quicker. A constitutional change, as proposed by Hillyard, requires two-thirds votes in the House and Senate followed by approval of the electorate in the 1998 general election.
The representative's bill only takes a majority vote in the House and Senate and approval by the governor. It would be retroactive to all property taxes levied in 1998, minimizing a property tax shift in an election year.
The centrally assessed big businesses think the state's current property assessment methodology unfair. A number of businessmen testified so during summerlong hearings before the Tax Review Commission. Valentine says his bill would reduce the grounds on which businesses could appeal their tax bills - and with less area to appeal, there would be fewer appeals.
He predicts big business will neither endorse nor oppose his bill. "They don't like it, for it limits their (legal) appeals. But I'd say this is the least worst alternative that they face," Valentine said.
Val Oveson, Tax Commission chairman, says Valentine considered introducing the same bill in last year's special legislative session on "intangible property." But GOP leaders didn't think the idea would fly then. Now maybe it will.
If Valentine's bill passes, Oveson said, complicated property tax assessments would return to where they were before the commission issued the controversial WilTel ruling. "But (the bill) opens the question on assessments on locally assessed (small) businesses." That, however, may be fought another day, before the Tax Commission or in the courts.