PROVO — Utah County's chief financial officer says the state Truth in Taxation law is threatening taxing entities that do not post higher budget numbers each year based on growth.
Bruce Hymas told the Utah County Commission last week that the legislation tying the certified tax rate to tax collections rather than to the tax levy makes it impossible for those entities that do not grow each year to survive.
"It becomes a regressive tax law," Hymas said. "It's terrible."
Hymas said he is stunned to realize he and others who work with the tax laws have sat back since 1984 and failed to recognize the damage being done.
Since tax collections can never be higher than the amount collected the year before, if a property owner misses a payment one year, the next year's budget will reflect the resulting reduction that cannot be made up without a Truth in Taxation hearing and subsequent adjustment.
Even though the law includes a five-year average adjustment that should allow for an unusual year, Hymas said that doesn't really help when an entity is very small or has no ability to afford to go to a Truth in Taxation hearing.
Such hearings cost money the taxpayer should not have to pay, he said, and some simply can't afford it.
There is also the fear that if Truth in Taxation hearings are held every year, they'll become so routine as to be ignored by the public.
"But the formula now is such that it takes the 'uncollectible' out twice," Hymas said, because the entity would be shorted the payment due and then "penalized" the next year because the amount collected would reflect that missing amount.
"If we don't go to Truth in Taxation every year to re-establish the rate, we'll end up not being able to collect taxes," he added.
Commissioner David Gardner said annual Truth in Taxation hearings and adjustments would hit at the hard times when communities and taxpayers would be least able to pay, creating animosity and misunderstandings that could be political nightmares.
Hymas cited a worst-case scenario involving Geneva Steel that could end up leaving Vineyard drastically short of tax revenue.
If the steel plant decided to miss a payment during its struggle with bankruptcy, Vineyard would be left without the ability to charge enough to restore its revenue.
"That one year kills you," Hymas said.