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Property tax notices — a shock in the mail

The property tax notices coming soon to mailboxes will bear bad news for most Utahns. Property taxes statewide are rising 11.6 percent this year, according to Deseret Morning News analysis of State Tax Commission data.

That comes while inflation has been running about just 2 percent here — so taxes are rising nearly six times faster than inflation.

"That's high," said Mike Jerman, vice president of the Utah Taxpayers Association. His business group projects tax hikes that are a bit smaller than what the Morning News figures, about 10.9 percent overall. Jerman uses somewhat different data and methods. Either way, it's a double-digit increase this year.

"Property taxes have not increased at a double-digit rate since 1999," Jerman said. "Typically, annual increases have been about 6 percent, which is in line with inflation and population growth."

The Morning News totaled and analyzed the final tax budgets for more than 500 local governments in Utah, and tax rates for them and the more than 1,200 "tax areas" created by crisscrossing boundaries of local governments. Among findings are:

• 471 of the 513 local governments in Utah are increasing property tax revenue this year.

• Eight local governments are at least doubling taxes this year. The town of Kanarraville is the highest, where rates are nearly quintupling. Another 11 governments are raising property tax revenues between 50 and 99 percent.

• Budgets call for raising a projected $1.85 billion through property tax this year, compared to $1.66 billion budgeted last year. Property tax notices by law should be mailed by Nov. 1, and taxes are due on Nov. 30.

• Taxes vary widely across Utah. The highest are in a small part of Shadow Mountain Lane in Ogden: $2,395 on a $250,000 home. The lowest are in an unincorporated part of Rich County near Bear Lake: $694 on a $250,000 home.

• Among the 25 most populous communities in Utah, people in Ogden pay the highest property taxes, followed by Salt Lake City and West Valley City. The lowest taxes among them are in St. George, followed by Pleasant Grove and Orem.

Big increases

Some places will have worse news on tax notices than others.

For example, the town of Kanarraville, south of Cedar City in Iron County, imposed the largest property tax budget increase of any government by percentage: 389.1 percent. In other words, its tax receipts are nearly quintupling.

Kanarraville Town Clerk David Ence said recently that the town sought that big increase "just to stop the hemorrhaging of cash" the town suffered in recent years. He said revenue had not met expenses for years, while the town used up a reserve fund — and even depended on donations to make ends meet.

"No one on the town board can remember the last time we had a tax increase. It has been at least 18 years," Ence said of Kanarraville, population 350.

In Woodland Hills, Utah County, where tax revenues are increasing 132.5 percent, Mayor Toby Harding also said it has been several years since the city raised taxes — and the city has no commercial base producing sales tax that might reduce pressure on property tax.

In Garden City, Rich County — where its taxes are increasing 118.8 percent — Councilman Leon Hardt said recently, "We haven't had a tax-rate increase for at least 20 years. And with the growth Garden City has seen, we are just way behind the eight-ball.... We need to build more roads."

(Even with the big increase, Garden City still has the fourth-lowest taxes in the state.)

Last year, several areas in Kane County had the lowest property taxes in the state. But they disappeared from that list this year after the Kane County government ordered a 94.9 percent increase in property tax revenue.

Commission Chairman Mark Habbeshaw said much of that increase is to hire extra employees and to build facilities needed to keep up with growth. He noted its hikes hit the same time as property values increased greatly and that significant tax hikes came from the local school district (18.5 percent) and the city of Kanab (20.1 percent).

In Salt Lake County, the largest increase by a local government was 64.2 percent by the city of Draper (a part of which is also in Utah County). Michael Sears, its finance director, has said it was to help make up for 10 years of not increasing rates, and the money will help replace roads and staff a new fire station.

"We realize the tax increase is large. But even with it, it's not going to fund all of our needs," he said.

Rare decreases

Some decreases did occur, which may mean good news for a few Utahns.

For example, Plain City in Weber County decreased its property taxes revenues by 12.8 percent.

Mayor Jay Jenkins said, "We need to be conservative, let people spend their own money and take only what we need to run the city." He said the city wants to cut back on general taxes as much as possible "to prevent having just a big pool of money that can be spent."

He said he has seen too many other cities raising taxes "and using just about any reason so they will have more money to spend." He wants any increases to be for very specific purposes and either fund themselves or have enough support to merit a general tax increase.

Another decrease — of 10.3 percent — came in Summit County. Commissioner Sally Elliott said it came about because of growth there that also is expanding its property tax base. She said that is more than covering the cost of expanding services (adding workers without extra administration), so taxes went down a bit.

She stresses the county is still expanding services, not cutting them. "For example, we're now offering free public transit in western Summit County," she said.

What appeared to be big cuts elsewhere are not what they seem at first glance. For example, data show Herriman is cutting its property tax revenues by 75 percent. But that is mostly because the city chose to end providing its own fire protection and instead joined the Salt Lake Valley Fire Service Area.

So taxes that had gone to Herriman for fire protection are now essentially going to the fire district, but overall taxes for residents of Herriman did go down because of the move.

Most expensive

For the second year in a row, Tax Area 426 in Ogden — consisting of four houses on Shadow Mountain Lane — has the highest property taxes in Utah.

Homeowners there pay $2,395 on a $250,000 home (actually down a bit from last year). That's more than three times higher than the lowest-taxed area in Utah, an unincorporated portion of Rich County near Bear Lake.

"We were afraid we would be the highest again, because I guess things like that don't change very easily," said Kathleen Alder, a resident of Shadow Mountain Lane.

She added, "We don't mind paying our fair share, but we want to make sure it is spent wisely. Because it is an election year, we will look extra carefully at who is running to make sure we get someone who will be frugal with our money."

Shadow Mountain Lane has two problems that create high taxes. First, residents pay to an especially long list of local governments. Second, many of those governments charge among the highest taxes for agencies of their kind.

Residents on that lane pay to eight local governments: Weber County, Ogden city, Ogden School District, three water/sewer districts, a mosquito abatement district and the Weber Area Dispatch 911 district. They also pay a special Ogden levy to help purchase additional water supplies.

In comparison, the lowest-taxed area of the state in Rich County is taxed by only two governments, Rich County and the Rich County School District.

Unfortunately for Shadow Mountain Lane, Ogden has the second-highest tax rate among large cities; Ogden School District has the third-highest rate among the state's 40 school districts; and Weber County has the sixth-highest tax rates among the state's 29 county governments.

Because of crisscrossing boundaries of the state's 513 local governments, the state has more than 1,200 "tax areas" with different rates. That also means that taxes can vary — sometimes greatly — within the same city or community because of how many governments charge taxes in different areas.

But taxes generally are the highest in Ogden. Of the 10 highest property tax rates in the state, six are found among Ogden tax areas (covering most of the city). Other areas in the Top 10 are in Blanding, Monticello, Eureka and East Carbon.

Conversely, Rich County has most of the lowest-taxed areas. In fact, the seven lowest rates in the state are found in tax areas there.

The budget pie

Most of the state's property tax — 56 percent — goes to Utah's schools. The 40 school districts expect to collect $1.04 billion in property tax. Jordan School District in Salt Lake County will reap the most, $184.9 million. Collecting the least is Tintic School District in Juab County, $219,974.

The next biggest piece of the property tax pie — 18 percent — goes to Utah's 29 county governments. Salt Lake County will collect the most, $138.7 million. Piute County will collect the least, $265,665.

Cities and towns in Utah will collect 14 percent of the overall property taxes. Salt Lake City will collect the most, $68.4 million. Tiny Ophir, in Tooele County, with a population of just 23, will collect the least, $423.

Special districts — including water, sewer, recreation, fire and mosquito abatement districts — will take 11 percent of the property tax pie. Collecting the most is the Central Utah Water Conservancy District (builder of the Central Utah Project), at $30.8 million. Collecting the least is the Henrieville Cemetery Maintenance District, $690.

By comparison ...

Jerman, with the Utah Taxpayers Association, says property taxes in Utah are actually lower than in most states — but Utah's overall, combined taxes are higher.

"Property tax is the only major tax where Utah is lower than the national average. Income, sales and gasoline taxes are above average as a percent of personal income," Jerman said.

One reason property taxes are lower, he said, is that Utah discounts the market value of residences, but not businesses, by 45 percent before multiplying it by the tax rate to figure taxes. "That is more generous than most states," he said.

Jerman noted that property values statewide rose by 22.9 percent this year. But overall taxes did not go up that much, in part because of "truth-in-taxation" laws.

Those laws generally force governments to lower the tax rates they apply to rising property values so that they generate the same revenue as the previous year — but some increases from new growth are allowed. If governments want to raise rates beyond that, they must hold public hearings publicized by large newspaper ads.

Jerman said property taxes would have increased about 6 percent statewide this year, instead of double-digits, if no increases were made beyond what truth-in-taxation laws allowed without extra hearings. Still, he said, "truth-in-taxation plays a major role" in keeping Utah taxes down.

Meanwhile, Jerman said total taxes of all types in Utah are higher than average in large part because of demographics. "Large family size here definitely has impact on the tax burden."

Because Utahns have more children per family, each wage earner must pay more taxes to provide services for more people.