This is the month when we pull out our wallets to pay 2009 property taxes.  Many of us were surprised that our tax bill went up this year when local tax entities had told us that they weren’t going to “raise property taxes.” In one way, there is some truth to what we were told, but from the perspective of our wallets, the statement is false.  Let’s explore this phenomenon of increased tax bills when property taxes “aren’t being raised.”

In truth, Kane County’s total tax collections from all the businesses and property owners that existed in 2008 did not increase this year.  That’s where the statement, “We’re not going to raise property taxes comes from.” But here’s the rub.  Sitting down and examining my property tax bill, I notice that our family is being asked to pay significantly more taxes in 2009 than 2008.

What is this annoying and expensive inconsistency about?  First, we are in a recession, so the value of businesses and real estate is dropping. In fact, the total assessed valuation of all Kane County properties dropped by about $64 million for tax year 2009. 

The key to our increased property taxes is Utah’s “Truth In Taxation” law. This law allows local governments and tax entities to automatically collect the same amount of property taxes from existing taxpayers as they did the previous year.  So, when the total assessed valuation dropped this year, local tax entities were allowed to simply increase the tax rate to compensate for this decreased valuation. When our new 2009 certified tax rate is multiplied by the total valuation of property, the result is the same amount of money that was collected from taxpayers in 2008.

The crux of the problem is that while some businesses and families actually received reductions of assessed valuation on their 2009 tax bills, many of us did not. So, most of us are paying property taxes at a higher tax rate this year than last year, without having the benefit of a reduced valuation of our property. In fact, Kane County’s certified tax rate for 2009 is about 7% higher than in 2008, and that’s the bite most property owners are experiencing in their pocketbooks to support our county government.

 An astute friend of mine pointed out that it’s not right when “Truth in Taxation” allows local tax entities to say, “Taxes aren’t being raised”, while most of us have a tax increase. She suggested that a more fitting name for this Utah state law should be “Deception in Taxation.” 

Does Utah’s Truth in Taxation law actually benefit taxpayers?  On the one hand, it requires tax entities to conduct public tax hearings when they plan to raise taxes, but at the same time the law provides local tax entities an easy way to collect all their taxes when a recession hits and assessed values decline. Without a public hearing, they can simply increase the certified tax rate to collect the same pot of gold they got last year (plus additional taxes for new growth).

I would rather see a Truth in Taxation law that truly helps taxpayers…a law that helps local businesses and families during hard times.  This new law would require local tax entities to collect less property tax in times of financial hardship. After all, when we the citizens are being made to tighten our financial belts, why shouldn’t local governments be required to do the same?