SALT LAKE CITY — Several large Utah corporations have requested more than $2.5 billion in property value decreases — appeals that county officials warn could shift millions in tax liability to homeowners.
The Utah Association of Counties issued a news release Thursday saying that if those appeals are successful, they can cause "enormous" shifts on small businesses and homeowners by hundreds of dollars per year in some cases.
“If these appeals were not contested and just taken as is, in some heavily impacted counties, this year alone represents a $500 increase in the tax liability for a homeowner of a $250,000 home,” Weber County Assessor John Ulibarri said in the news release. “Counties are the lone watchdog for homeowners to ensure this tax shift does not occur without scrutiny."
This year, Salt Lake County may be stepping into that "watchdog" role.
Stemming from concerns that some tax appeals could be violating the Utah Constitution, Salt Lake County Attorney Sim Gill may be filing a lawsuit against Delta Airlines — one of the large Utah corporations that have requested property value decreases so far in 2017, along with Verizon and Rocky Mountain Power.
A law passed earlier this year, SB157, enacted a new method for determining the fair market value of centrally assessed aircraft — allowing an up-to 20 percent reduction for aircraft when they're bought in bulk.
According to the bill's fiscal note, it could shift "some portion of the $12 million in property tax burden of airlines to other individuals and businesses."
The bill's sponsor, Sen. Curt Bramble, said Thursday he's heard grumblings of a potential Salt Lake County-driven lawsuit against Delta — which operates a major hub in Utah's capital city — out of worries that the new law gives the airline an unconstitutional tax break.
"I'm aware that they have been rattling their sabers on bringing a lawsuit," Bramble said, though he disagrees with any claim that the bill could be unconstitutional.
Gill on Thursday declined to discuss any specifics or to confirm if he plans to sue Delta. But he did say his office is reviewing any possibilities of tax appeals that may create "an unfair or unconstitutional shift of burden from one industry to other taxpayers, small businesses and homeowners."
The Utah Constitution requires that all assets be assessed at fair market value.
When asked if his office has any concerns about the 20-percent aircraft discount allowed under SB157, Gill said his office is reviewing the bill.
"Whenever new legislation comes out that may have an adverse impact on our client, Salt Lake County and it's citizens, we're going to do our due diligence," Gill said. "We, in looking out for the best interests of Salt Lake County, are examining statutory schemes and reviewing the statutory framework."
Each spring, centrally assessed corporations (corporations with property that spreads over multiple counties) prepare appeals to their valuation and submit them to the Utah Tax Commission. Any decrease in value to multi-county corporation properties automatically triggers an increase to the rest of the tax base, including homeowners, according to the Utah Association of Counties.
That's because governments who impose a property tax are guaranteed a certain amount of money based on values of all properties from the previous year, meaning as individual values ebb and flow there are constant shifts between taxpayers to cover that guaranteed amount.
“In recent years, we have seen numerous attempts of large corporation taxpayers to both run and influence legislation that heavily restricts the county’s watchdog role in questioning appeals,” said Lincoln Shurtz, who represents the Utah Association of Counties. “Sadly, most citizen homeowners don’t understand our complicated tax system, and so this effort to shift value from one large taxpayer to many homeowners largely goes unnoticed.”
Shurtz said his organization worked with Bramble on SB157 and expressed concerns about the bill's constitutionality.
"Our concern was that codifying an up to 20 percent discount on its face seems to draw questions as to whether or not we would also meet the requirements of fair market value," he said.
But Bramble said that's "the whole purpose" of SB157 — to bring aircraft valuations in-line with the Utah Constitution's requirement that all assets be valued at fair market value. He said aircraft values have seen an "extraordinary" increase over the last several years.
"Something like 40 percent per year," he said.
Bramble also said SB157 tells the Utah Tax Commission to use the Airliner Price Guide — a sort of Kelly Blue Book for aircraft — to assess airliners. If the aircraft guide doesn't provide a method for a fleet (or in bulk) purchase, that's when the commission would reduce the aircraft value of each aircraft by 0.5 percent, for an up to 20 percent reduction.
"This wasn't trying to give the airline a break," Bramble said. "It wasn't trying to do anything more than to establish a bright line, a very clear standard, for evaluating aircraft. And I believe the airline price guide gives us that clear standard."
Bramble said if Salt Lake County is going to contest any Delta valuations, "I think they're going to have a tough time saying it's unconstitutional."
Plus, Bramble said, the Utah Tax Commission is the entity that reviews centrally assessed taxpayers, not county entities.
"That would be similar to if a school district didn't like an IRS audit," he said.
Delta did not respond to requests for comment Thursday.