Utah lawmakers are political animals, and as such they have a keen sense of smell when it comes to an election issue. And nothing whets their appetites quite like tax inequities.
That was certainly evident Wednesday at the Revenue and Taxation Committee where lawmakers listened to a parade of witnesses lambasting county assessors, an insensitive appeals process and onerous property tax levies that had lawmakers angry, bewildered and demanding answers.
Officially, the committee was holding hearings on how to offer seniors property tax relief and whether cabin owners should be paying property taxes on the full value of their property rather than the 65 percent other homeowners pay.
But in the end, it was all about a single issue: Are local county assessors out of control when it comes to values being placed on property and the spiraling assessments that are forcing many to lose their property.
Assessors tried to defend themselves. "Every time I come here I feel the world hates me. We are trying to be as fair and honest and equitable as we can," Summit County Assessor Barbara Kresser told the committee
Lawmakers were polite but skeptical. "This is almost unbelievable," mused Sen. Howard Stephenson, R-Draper, who wanted to summon the Salt Lake County assessor before the committee to explain his actions in one particular case.
As it turns out, the assessor was in the audience, but he offered only the observation that "it disturbs me, too." Tax equity was center stage in the debate on tax relief for the elderly, who live on fixed retirement incomes but see their property taxes going up every year.
But no matter how you look at it, the Utah Constitution simply doesn't allow a property tax break for Utah's elderly.
The poor, yes. The disabled, yes. But not the old who aren't poor or disabled.
But Utah lawmakers have never been of the mind to let the constitution get in the way of a good tax issue, especially in an election year.
On Wednesday, the committee toyed with a variety of ideas on how to give seniors relief from spiraling assessments without running afoul of the Supreme Court and without bankrupting county governments and schools that rely heavily on property taxes.
The latest idea floated by Rep. Wayne Harper, R-West Jordan, goes something like this: Once a homeowner turns 65 and retires, the taxes on his or her home would be frozen at that level, and any property tax increases after that time would be deferred until the homeowner sold the property or died, at which time the county would collect on the lien for its uncollected taxes.
In other words, seniors would not see their property taxes increase, but their survivors would pay the bill sometime down the road. Meanwhile, seniors would have the surety, Harper said, that their property taxes will not continue to go up every year at the same time their income is not going up.
The idea is not unlike the "greenbelt" deferral given to farmers, whose agricultural land is taxed at a lower rate. When the land is sold, the difference in taxes going back five years is then collected.
Lawmakers were intrigued by Harper's idea, but the committee was careful to say that's all it is at this point. There were still many details to work out, like what happens if a person lives until 90, leaving a 25-year tax lien that could be worth more than what the house is worth. Sen. Lyle Hillyard, R-Logan, urged caution, noting that "in the rush to give benefits to those who need it, you impact everybody else." In other words, any effort to shift the burden away from retirees would likely mean a tax shift to all other homeowners as counties made up for lost tax revenues in the first years of the deferral. Those losses would be made up in later years as homes are sold and the back taxes paid.
"We can sit back and say homeowners vote," Hillyard said. "But there was a purpose in the constitution to make everybody equal."
Those with cabins and second homes also lined up to give lawmakers an earful about how their cabins, many mountain shacks with no power, heat or water, are being assessed for hundreds and hundreds of thousands of dollars.
Sen. Ed Mayne, D-West Valley, has crafted a compromise bill that would give some relief to those cabin-owners who have no access to basic services, but luxury second homes and cabins hooked into county utilities and services would still pay. County assessors have reluctantly bought off on the bill, but even they acknowledge the problem rests in a provision that calls on the Legislature to reimburse counties for lost revenue, something not likely to happen in lean budget years.
Under current law, homeowners pay property taxes on 65 percent of the value. But a second home or cabin is taxed at a full 100 percent of value.
"There is no other class of property where you are penalized if you have two of them," said Mary Ellen Pugsley, who owns a cabin in Brighton.
Del Draper owns a 1,000-square foot drafty cabin near Alta that has no power, heat, water or sewer. Yet the county says it is worth $400,000. He has seen his taxes go up 244 percent since 1998.
"There is something seriously out of whack with that tax policy," he told the committee, noting that he has won on property tax appeals only to have the county file higher assessments the next year, starting the fight all over again.
Susan Tillman told how her family built its cabin for $5,600. This year, the tax bill on it was $5,000. "People are being eaten alive," she said.
And that's something politicos can sink their teeth into.
E-mail: spang@desnews.com