Should Utah cities charge transportation fees to churches?

The Utah House and Senate are barreling toward a collision after taking opposite positions over whether religious organizations should pay city fees tied to property ownership.

On Thursday, the Senate narrowly passed a House bill that would regulate city transportation utility fees after amending it to carve out certain religious properties, with Senate President Stuart Adams, R-Layton, serving as the tie-breaking vote.

Days earlier, the two chambers approved nearly identical bills distinguished only by whether they exempted churches from city fees that function like taxes.

As lawmakers rush to pass hundreds of pieces of legislation, the overlap between fees and taxation, and church and state, has led to a last-minute scramble with just two days left in the 2025 legislative session.

Legislature divided over road-use fees

Rep. Karen Peterson, R-Clinton, came to the state Capitol this year determined to find common ground between local governments and faith groups to regulate how municipalities levy so-called “transportation utility fees.”

But on Tuesday, House lawmakers roundly rejected Peterson’s “compromise” proposal to exempt church meetinghouses, church administrative buildings and church welfare centers from road-use fees imposed by cities to fund transportation infrastructure.

In a 70-3 vote, representatives opted for the original version of Peterson’s bill, HB454, which would allow cities to implement transportation utility fees on all property owners if they conduct a study to ensure fee rates are “reasonably related” to road use and follow the same truth in taxation process required for property tax changes.

“Whenever we exempt somebody, the tax doesn’t go away, it just gets shifted on everyone else,” said Rep. Norm Thurston, a Republican from Provo. “In our city that is a real problem because it’s already concentrated.”

One hour earlier, Sen. Brady Brammer, R-Pleasant Grove, saw his almost identical bill, SB310, pass with large margins in the Senate, but with one major difference; it would require cities to exempt all religious organizations from transportation utility fees.

Whereas Peterson’s failed substitute would have let cities impose these fees on church-owned stadiums, office buildings and other commercial endeavors covered by property taxes, Brammer’s bill would exempt all property owned by religious organizations, including their “auxiliaries” and “associations.”

On Thursday, Brammer, as the floor sponsor to Peterson’s bill, introduced almost the exact same substitute that the House had rejected on Tuesday. The bill passed 15-14, with Adams tipping the scale, after a debate over whether churches and other nonprofits — which are also exempt in the substitute — should do more to “pay their way.”

Brammer pointed out that Utah’s Constitution prohibits the taxation of religious, charitable or educational nonprofits, and that despite a 2023 Utah Supreme Court ruling, transportation utility fees effectively function as taxes because they are not directly based on the fee-payer’s use of a service and are tied to property ownership.

“I don’t think they’re properly measuring the usage of the public asset by the religious organization,” Brammer told the Deseret News. “We have long found that we save far more taxes by enabling religious and charitable organizations than we do by taxing them.”

Does Utah tax religious organizations?

Cities started implementing road-use fees a decade ago, beginning with Provo and spreading to a dozen others, as decreasing gas tax revenues and increasing road maintenance costs made it difficult to find funding for badly needed infrastructure improvements without raising already high property taxes.

“It became clear that there just wasn’t enough money to meet those needs,” said Cameron Diehl, the executive director of the Utah League of Cities and Towns.

The controversial new funding mechanism led to a 2023 ruling from the Utah Supreme Court which determined that transportation utility fees are to be considered fees, not taxes, as long as they bear some “reasonable relationship to the cost of the benefit or service.”

To stay well within these legal bounds, the League of Cities and Towns worked with Peterson to craft strict requirements for the study cities must conduct to implement the fee, Diehl said.

The studies must take into account traffic counts and apportion fee rates based on whether the traffic is mostly for residential, commercial or house of worship purposes.

Cities opposed Tuesday’s compromise bill because they worried that legislative exemptions for religious organizations would spread from one type of fee to another, Diehl said.

Brammer said he understands the League of Cities and Towns’ point of view but believes that cities are “discounting the benefit that religious organizations play in their cities.”

Rev. Dr. Curtis Price of First Baptist Church of Salt Lake City said he can see both sides of the argument as the pastor of a small congregation that occasionally struggles to pay other utility fees while doing all it can to offset its tax exemptions by contributing to the community through service, religious instruction and activities.

But Curtis recognizes that in some areas of the state, churches are one of the largest property owners and it makes sense for cities to ask “to spread that pain out a little bit” to fund shared resources.

“Those properties take resources that the city has to pay for and so I understand a need to get creative about having to resolve some of those issues,” Curtis said.

The Church of Jesus Christ of Latter-day Saints, which is headquartered in Utah and owns the parent company of the Deseret News, is one of the largest landowners in the state and would be impacted by this bill.

Many of the lawmakers in the Legislature are also members of the church. The church did not respond to a request for comment about the legislation.

What’s next for the church fee debate?

Before HB454 made its way to the Senate, Adams said he is “adamantly opposed” to the House proposal.

During a media availability on Tuesday, Adams said he was “disappointed” that the League of Cities and Towns had come out against exemptions for religious meetinghouses.

Echoing a point made by Thurston and Brammer, Adams said that regardless of court rulings, transportation utility fees function like a tax.

“This is a tax, they’ll call it a fee. But I just can’t imagine we in Utah want to tax religious organizations and wash away that exemption,” Adams said. “And I think that’s the battle. And personally, I’m going to stand up.”

Peterson’s House bill will now head back to the House where it will likely be rejected, requiring the bill sponsors to come together in a conference committee to negotiate a version that can pass both chambers.

If some sort of religious exemption is not included, Thurston, Brammer and Peterson alluded to potential lawsuits from religious institutions.

Although the bill specifies that city transportation utility fees cannot be based on property ownership “alone,” nonprofits could still argue that the fee is directly tied to property like a property tax, Peterson said.

But this question has already been settled by the courts, according to Thurston. Provo has already included religious organizations in its transportation utility fee for a decade, he said.

And while Thurston agrees that the fee is essentially a tax, he said that under the court ruling, these fees should be applied as equally as possible to avoid impacting some residents more than others while also supporting local government.

“It’s a way of funding the government. Should that apply to everybody? And the answer is, yeah, it should apply to everybody,” Thurston said. “In an ideal world, there’s a better way of doing it, but in the meantime, this is what we have.”