An audit regarding property taxes across the state of Utah was presented to the Utah Legislature on Wednesday.
In the report, “A Case for Increased Accountability and Transparency,” the Legislative Audit Subcommittee identified a lack of proactive oversight by the Utah State Tax Commission’s Property Tax Division. The division’s inconsistencies in county assessments and appeals processes could potentially lead to unfair property valuations across the state.
State legislation mandates that county assessors physically inspect and evaluate every property in their jurisdiction at least once every five years to determine its full market value.
“The Tax Division has a natural tension in code,” the audit manager at the office of the Utah Legislative Auditor General, Leah Blevins, told the audit subcommittee.
“On one side, they are charged with providing education and assistance and helping counties stay within the code. And then, on the other hand, they are the enforcement and oversight body,” she added. “And so there’s a natural tension. And then, in the last decade or so, the tax commission has really focused on education and assistance, which has led to a bit of being a little bit passive on the oversight side of things.”
To improve this, Blevins and her team mentioned two appraisal programs that assessors have been working on this past year:
- Annual update of property values: This program requires county assessors to update property values annually based on a systematic review of current market data, which is essential to maintaining the accuracy and fairness of property assessments by reflecting changes in the market.
- Detailed review of property characteristics: This program mandates that county assessors complete a thorough review of property characteristics for each property at least once every five years. The review is important for ensuring that all relevant property details are accurately recorded and assessed, contributing to the equitable distribution of the property tax burden.
Many appraisers have implemented Paragon, Utah Mass Appraisal, a new mass appraisal system developed by the Multicounty Appraisal Trust, into their work. It’s intended to update all parcels of real property within the county each year using accepted valuation methodologies. This includes programming with specialized criteria to provide uniform and equal treatment of parcels within the same class of real property throughout the county.
Regarding the system’s efficiency so far, “Currently, 18 counties are on PUMA. With more scheduled to join over the next few years, we think that there’ll be a huge efficiency bonus by having more counties per month, so that way they can standardize the data and processes,” said audit staff member Clint Yingling on Wednesday.
Assessing tax burdens
Property taxes in Utah are primarily handled at the county level.
“Utah receive(s) a property tax exemption of 45%. That means only 55% of a home’s value is subject to taxation,” per SmartAsset. “That exemption keeps property taxes for most homeowners quite low. In turn, Utah’s average effective property tax rate is 0.58%, the 11th-lowest in the U.S.”
To determine property tax, the assessed value of your home is multiplied by the tax rate, which is established by the local tax authority: Assessed value x tax rate = property tax.
In 2021, the average home in the U.S. was $244,900, so many Americans spend nearly $2,700 a year on property expenses, or around $225 monthly. But according to Business Insider, the average home price, per Zillow, in the U.S. is $346,270. With a property tax rate of 1.10%, the typical tax bill comes to $3,803 annually. That’s an extra $316.92 per month on your mortgage payments.
“I think everyone’s property taxes have floated up. And I don’t know how the calculations work, but it just doesn’t seem that property tax, has stayed the same, regardless of the inflation on their house,” state Senate President Stuart Adams, R-Layton, said. “So it seems like it’s kind of working, but not totally working just from personal experience.”
Blevins replied that what she and her team found in their research is that there’s not a lot of data on truth and taxation. “We didn’t identify any sneaky increases in taxes, but that’s not to say that there isn’t,” she added. “Our concern is transparency, but also uniformity and training for appeals officers. Currently, there’s very little data that’s tracked about the appeals process, because it’s not enforced.”
Some counties lack adequate property data, making it difficult for property owners to assess the fairness of their tax assessments. The audit proposed suggests that without adequate enforcement, counties may continue to operate without sufficient accountability, leading to disparities in property tax assessments and potentially unfair tax burdens on property owners.
Following the comment made by Blevins and her team, Scott Smith, executive director of the Utah State Tax Commission, told the audit subcommittee, “We agree and support the conclusions and recommendations contained in the audit. We believe that implementation of the recommendations will improve the property tax system, all sectors in Utah, and the Property Tax Division is committed to consistently enforcing the assessment requirements of Utah code.”
Brandy Grace, CEO of the Utah Association of Counties, emphasized that property taxes are one of the No. 1 concerns facing Utahns. She and her team shared that in 2016 the average residential price in Davis County was $260,000. In 2023, it was estimated at $523,000, a 101% growth rate.
“We recognize that although some of these things are outside of our control. We collectively recognize the importance of accurate assessments and a transparent and formal process for truth and taxation notices and appeals, and we’re committed to working with the legislature and the tax commission, and then even where appropriate for the association to help with some training and providing maybe some consistency as well,” she added.