Every change in tax policy comes with consequences. Some state lawmakers are studying California's famous Proposition 13 to see whether Utah should adopt something similar to handle its property taxes. We hope once they study the issue closely they will come to the obvious conclusion that this would be a bad move.
The Utah Taxpayers Association published figures this month showing how Californians, despite Proposition 13, pay more in property taxes than do people in Utah. As a measure to hold the line on taxes, it simply doesn't work.
Beyond that, California's system is grossly unfair. It locks in a property tax rate when someone buys a home, setting a strict cap on how much taxes can rise on that house. When the homeowner sells, the home is reassessed and the new owner is charged the higher rate, which then is locked in until he or she sells.
As the Taxpayers Association asked, why should people who have lived in their homes a long time be considered to have less of an obligation to pay for the services, such as police and fire protection, that serve the entire community? The law places an unfair burden on young homebuyers and people moving into the state. In addition, it creates an incentive for people to remain in their homes as they get older, rather than buying something smaller. That can lead to a stagnant real estate market.
In general, Utah's fair-market-value property tax system works well. It failed last year in counties that do not accurately reassess all properties every year. Salt Lake County has such a system in place. Last year, only 2.28 percent of property owners there appealed their valuations, despite the fact it was the most volatile real estate year in memory.
If it works right, Utah's property tax system keeps tax bills on a relatively even keel. Local governments are not allowed to collect more money from one year to the next without declaring a tax increase and holding hearings. Over time, tax bills on homes in more desirable real estate locations will rise in relation to those in other areas, but the change should be gradual.
The Utah Foundation published a report earlier this year showing that Utahns today spend less of their income on property taxes than did state residents in 1965, which means the system works well. What it needs are minor tweaks to ensure that each county assesses all properties each year.
Utah does not need to adopt California's failed system.