Property tax is the most stable, complex and local tax
Kem C. Gardner Policy Institute
I
411 East South Temple Street, Salt Lake City, Utah 84111
I
801-585-5618
I
gardner.utah.edu
Figure 1: Year-Over Change in Real (Ination-Adjusted) Tax Revenue per
Capita for Major Utah Taxes, FY 1982-2022
-20%
-10%
-30%
-40%
0%
10%
20%
30%
40%
50%
1982 1987 1992 1997 2002 2007 2012 2017 2022
Property Tax State and Local Sales
and Use Tax
Individual and Corporate
Income Tax
Sales Tax Rate Increase
Pandemic and Due Date Timing Shift
Statewide School
Property Tax Cut
Tax Cuts and Dot-com Recession
Tax Cuts and
Great Recession
-20%
-10%
-30%
0%
10%
20%
30%
40%
50%
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Property Tax State and Local Sales and Use Tax Individual and Corporate Income Tax
Sales Tax Rate Increase
Pandemic and Due Date Timing Shift
Statewide School Property Tax Cut
Tax Cuts and Dot-com Recession
Tax Cuts and Great Recession
Source: Utah State Tax Commission and Kem C. Gardner Policy Institute
STABLE – The property tax is Utah’s most
stable tax. This stability comes from both
the less volatile nature of property and
the design of Utah’s property tax system.
COMPLEX – Utah’s property tax system
involves many moving parts, which often
take place behind the scenes. Taxpayers
often have little to no interaction with the
property tax system until the property tax
valuation estimate and bill arrives.
LOCAL – Local entities impose all Utah
property taxes. However, property taxes
interact with state funding, particularly for
schools. Local property tax decisions also
inuence other local scal decisions for
other taxes, such as sales taxes and fees.
Property Tax Insights
December 2022
Q: Where does
the money go?
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
FederalStateOtherProperty
Utah National Average
47% of
national
average
64% of
national
average
50% of
national
average
State Funds
(Mostly Income Tax)
$3.03
$0.68
$1.19
$0.77
$0.26
Local Property Tax
School
57% ($2.5 Billion)
County
18% ($0.8 Billion)
Limited-purpose
12% ($0.5 Billion)
City & Town
13% ($0.6 Billion)
$4.5
Billion
$5.9
Billion
Basic
Related-to-Basic
Levy Guarantee
75% of national
average
60% of
national
average
Local
Note: Includes ad valorem and fee-in-lieu
property tax revenue
Source: Utah State Tax Commission
Figure 3: Property Tax Recipients, 2021
Q: How have property taxes shifted
among taxpayers?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1921
1931
1941
1951
1961
1971
1981
1991
2001
2011
2021
Statewide School Property Tax Revenue Other Property Tax Revenue
0
0.002
0.004
0.006
0.008
0.010
0.012
1922
1932
1942
1952
1962
1972
1982
1992
2002
2012
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
7%
1955
7%
1960
7%
1965
7%
1970
6%
1975
6%
1980
6%
1985
9%
1990
11%
1995
11%
2000
10%
2005
6%
2010
6%
2015
5%
2020
5%
16%
12%
11%
10%
8%
3%
4%
3%
4%
8%
9%
11%
10%
10%
10%
26%
5%
14%
32%
32%
6%
15%
29%
34%
5%
16%
27%
35%
5%
15%
28%
37%
5%
17%
28%
48%
7%
17%
18%
45%
8%
18%
19%
41%
8%
17%
21%
45%
7%
18%
15%
44%
7%
20%
11%
46%
6%
20%
9%
46%
5%
22%
10%
47%
6%
21%
10%
50%
6%
21%
8%
52%
6%
20%
7%
2021
Motor Vehicle
Other, including Vacant LandResidential
Business Personal PropertyBusiness Real Property
Centrally Assessed Business
0
20
40
60
80
100
120
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: Utah State Tax Commission, Property Tax Division, Annual Statistical Reports
Figure 2: Property Tax Base Composition, 1955-2021
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
FederalStateOtherProperty
Utah National Average
47% of
national
average
64% of
national
average
50% of
national
average
State Funds
(Mostly Income Tax)
$3.03
$0.68
$1.19
$0.77
$0.26
Local Property Tax
School
57% ($2.5 Billion)
County
18% ($0.8 Billion)
Limited-purpose
12% ($0.5 Billion)
City & Town
13% ($0.6 Billion)
$4.5
Billion
$5.9
Billion
Basic
Related-to-Basic
Levy Guarantee
75% of national
average
60% of
national
average
Local
Figure 5: Total Per Pupil Revenues by
Funding Source, 2018
Source: National Center for Education Statistics
Source: Utah Foundation, Utah State Tax Commission, and Utah Superintendent’s
annual reports
Figure 8: Statewide and Discretionary Local Property Tax
Revenue as a Share of Total School Property Tax Revenue,
1921–2021
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1921
1931
1941
1951
1961
1971
1981
1991
2001
2011
2021
Statewide School Property Tax Revenue Other Property Tax Revenue
0
0.002
0.004
0.006
0.008
0.010
0.012
1922
1932
1942
1952
1962
1972
1982
1992
2002
2012
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
7%
1955
7%
1960
7%
1965
7%
1970
6%
1975
6%
1980
6%
1985
9%
1990
11%
1995
11%
2000
10%
2005
6%
2010
6%
2015
5%
2020
5%
16%
12%
11%
10%
8%
3%
4%
3%
4%
8%
9%
11%
10%
10%
10%
26%
5%
14%
32%
32%
6%
15%
29%
34%
5%
16%
27%
35%
5%
15%
28%
37%
5%
17%
28%
48%
7%
17%
18%
45%
8%
18%
19%
41%
8%
17%
21%
45%
7%
18%
15%
44%
7%
20%
11%
46%
6%
20%
9%
46%
5%
22%
10%
47%
6%
21%
10%
50%
6%
21%
8%
52%
6%
20%
7%
2021
Motor Vehicle
Other, including Vacant LandResidential
Business Personal PropertyBusiness Real Property
Centrally Assessed Business
0
20
40
60
80
100
120
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1921
1931
1941
1951
1961
1971
1981
1991
2001
2011
2021
Statewide School Property Tax Revenue Other Property Tax Revenue
0
0.002
0.004
0.006
0.008
0.010
0.012
1922
1932
1942
1952
1962
1972
1982
1992
2002
2012
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
7%
1955
7%
1960
7%
1965
7%
1970
6%
1975
6%
1980
6%
1985
9%
1990
11%
1995
11%
2000
10%
2005
6%
2010
6%
2015
5%
2020
5%
16%
12%
11%
10%
8%
3%
4%
3%
4%
8%
9%
11%
10%
10%
10%
26%
5%
14%
32%
32%
6%
15%
29%
34%
5%
16%
27%
35%
5%
15%
28%
37%
5%
17%
28%
48%
7%
17%
18%
45%
8%
18%
19%
41%
8%
17%
21%
45%
7%
18%
15%
44%
7%
20%
11%
46%
6%
20%
9%
46%
5%
22%
10%
47%
6%
21%
10%
50%
6%
21%
8%
52%
6%
20%
7%
2021
Motor Vehicle
Other, including Vacant LandResidential
Business Personal PropertyBusiness Real Property
Centrally Assessed Business
0
20
40
60
80
100
120
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Figure 7: School Property Tax Statewide Basic Levy Rate,
1922–2022
Rate adjusted for changes in statutory assessment levels, which were below 100% from
1947 to 1986.
Source: Utah Superintendent’s annual reports
Nearly 60%
of property taxes
fund schools
School property
tax resources are
uneven
State school funding
closely interacts with
property taxes
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
FederalStateOtherProperty
Utah National Average
47% of
national
average
64% of
national
average
50% of
national
average
State Funds
(Mostly Income Tax)
$3.03
$0.68
$1.19
$0.77
$0.26
Local Property Tax
School
57% ($2.5 Billion)
County
18% ($0.8 Billion)
Limited-purpose
12% ($0.5 Billion)
City & Town
13% ($0.6 Billion)
$4.5
Billion
$5.9
Billion
Basic
Related-to-Basic
Levy Guarantee
75% of national
average
60% of
national
average
Local
Figure 4: Minimum School Program
Funding, FY 2022 ($ in billions)
Source: Oce of the Legislative Fiscal Analyst
Figure 6: Real Per Pupil Basic Levy School Property Tax Revenue, 1931–2021
Minimum
School Program
created, 1947
Basic levy cut
and residential
exemption
expanded,
1995 and 1996
Increased
emphasis
on statewide
property tax
equalization
begins, 2015
State-imposed
school levy
eliminated,
1973
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
1931
1941
1951
1961
1971
1981
1991
2001
2011
2021
Real Revenue per Pupil
Real Locally-Imposed Statewide Property Tax (Basic Levy) Revenue per Pupil
Real State-Imposed Statewide Property Tax (Basic Levy) Revenue per Pupil
State-imposed
school levy
eliminated
in1952 and
reinstated
in 1954
Source: Utah Superintendent’s annual reports and Utah Foundation
December 2022
I
gardner.utah.edu INFORMED DECISIONS
TM
2
Q: How Do Property Taxes Impact School Funding?
Q: How does property tax rate setting work?
Source: Kem C. Gardner Policy Institute
Figure 10: Example of Truth in Taxation Certied Tax Rate Process
Entity-wide Taxable Value
Certied
Tax Rate*
Imposed
Tax Rate
Tax Revenue
($ millions)
Year
1
Previously Existing Property $200 Million
1.00% 1.00%
$2.0
New Growth $0 $0
Total: $2.0 Million
Year
2
Previously Existing Property $400 Million
0.50% 0.50%
$2.0
New Growth $40 Million
$0.2
Total: $2.2 Million
Year
3
Previously Existing Property $660 Million
0.33% 0.40%
$2.2
New Growth $90 Million
$0.3
$0.5
(Revenue Increase)
Total: $3.0 Million
Individual property owner's taxes may shift
even with no overall total revenue increase
on previously existing property
n
Target Tax Revenue from Previously Existing Property
n
Tax Revenue from “New Growth” (Newly-created Property)
Example Taxpayers
A B C D E
Taxable Value $350,000 $1,500,000 $400,000 $250,000 $800,000
Taxes Paid $3,500 $15,000 $4,000 $2,500 $8,000
Taxable Value $400,000 $1,500,000 $800,000 $600,000 $750,000
Taxes Paid $2,000 $7,500 $4,000 $3,000 $3,750
Truth in Taxation Notice and Hearing Required
Value
increases,
tax
decreases
Value the
same,
tax
decreases
Value
increases,
tax
constant
Value
increases,
tax
increases
Value
decreases,
tax
decreases
* Adjusts yearly to meet target tax revenue
Taxing entity boards establish tax
revenue amounts. Assessed
property values allocate those tax
amounts among taxpayers.
Rate Cut
in Half
1
Local Tax – Property tax is a local tax, imposed by taxing
entities including school districts, cities and towns,
counties, and limited-purpose local entities (such as
water districts).
2
No Automatic Revenue Increase on Existing
Properties – When property values increase, the
certied tax rate automatically adjusts down to oset
that valuation increase on existing properties, so taxing
entities receive a at revenue amount.
3
Truth in Taxation Requires Public Notice of Revenue
Increase – Under Utah’s “Truth in Taxation” system, to
increase the revenue dollar amount, taxing entities must
follow specied public notice and hearing processes.
4
No Automatic Ination Adjustment – Utah’s Truth in
Taxation system does not provide for any automatic
inationary adjustment. That is, the certied tax rate is set
to generate the identical revenue amount as the prior year.
5
Newly Created Property Can Generate New Revenue –
New property, such as a new house or commercial building,
is subject to the same tax rate as all other property and can
generate new revenue for a taxing entity.
6
Taxing Entities Set Property Tax Levels – Taxing entities
impose tax rates, within any applicable statutory caps.
7
Property Values Distribute Tax Burden – When taxing
entities set tax rates, assessed property values allocate
those taxes among property owners.
Source: Utah State Tax Commission
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1921
1931
1941
1951
1961
1971
1981
1991
2001
2011
2021
Statewide School Property Tax Revenue Other Property Tax Revenue
0
0.002
0.004
0.006
0.008
0.010
0.012
1922
1932
1942
1952
1962
1972
1982
1992
2002
2012
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
7%
1955
7%
1960
7%
1965
7%
1970
6%
1975
6%
1980
6%
1985
9%
1990
11%
1995
11%
2000
10%
2005
6%
2010
6%
2015
5%
2020
5%
16%
12%
11%
10%
8%
3%
4%
3%
4%
8%
9%
11%
10%
10%
10%
26%
5%
14%
32%
32%
6%
15%
29%
34%
5%
16%
27%
35%
5%
15%
28%
37%
5%
17%
28%
48%
7%
17%
18%
45%
8%
18%
19%
41%
8%
17%
21%
45%
7%
18%
15%
44%
7%
20%
11%
46%
6%
20%
9%
46%
5%
22%
10%
47%
6%
21%
10%
50%
6%
21%
8%
52%
6%
20%
7%
2021
Motor Vehicle
Other, including Vacant LandResidential
Business Personal PropertyBusiness Real Property
Centrally Assessed Business
0
20
40
60
80
100
120
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Figure 9: Statewide Count of Entities Holding Truth in
Taxation Hearing, 2010–2022
Q: How Does Utah's Truth in Taxation System Work?
Value
Doubles
gardner.utah.edu
I
December 2022
INFORMED DECISIONS
TM
3
Q: What happened in 2022?
n School property tax increased
– Statewide school property tax basic levy rate remained
frozen (nal year of 2018-2022 freeze)
– Some school districts held truth in taxation hearings to
increase tax rates
n Cities, counties, and other districts (like water districts) also held truth
in taxation hearings to increase tax rates
n Taxes shifted from businesses to households
- High home price increases
- Changing business property markets
- Assessment practices
n High ination put pressure on government,
household, and business costs
n The Legislature passed SB 25 providing
property tax relief for qualifying individuals
Figure 11: Existing tax relief programs
are underutilized
Source: U.S. Census Bureau and Utah State Tax Commission
If your policy objective is to… Then consider options to…
Minimize regressivity
n Ensure circuit breaker for low-income seniors is appropriately sized and easy for eligible taxpayers to access
n Review alternatives to abate property taxes of the poor who are not seniors
n Cap primary residential exemption for high-value properties
n Adjust fee-in-lieu values to reduce regressivity
n Create income tax credit for low-income households
Ensure market-driven factors
drive distribution of property tax
burden
n Disclose property sale prices (could do so as private record or public record)
n Ensure assessors have sucient stang, training, data, and up-to-date assessment tools
n Cap, reduce, or eliminate various types of preferential tax treatment (such as exemptions and special valuation
approaches)
n Review statute, administrative rules, and assessment practices to determine if any laws, rules, or approaches
inhibit fair market value assessment
Adjust local government revenues
(up or down) to match core service
needs funded with property tax
n Determine appropriate service levels and change tax rates to generate desired revenue
n Review tax rate caps to ensure they are designed appropriately in context of Utah’s Truth in Taxation system
n Allocate more income taxes to schools via equalization programs such as voted/board levy guarantee program,
and oset increases with local property tax certied tax rate adjustments
Equalize school property taxes
statewide
(or further localize school property taxes)
n Re-emphasize the statewide basic levy over local school taxes:
• Increase, keep constant, or adjust basic levy rate for CPI ination
• If overall revenue neutrality is desired, oset increased allocations from statewide property taxes with local
certied tax rate reductions
n Equalize revenues (all or growth) from second homes, centrally assessed businesses, commercial property, or
other non-residential property
n Focus state income tax funds more on school districts with low property tax base making higher local tax eort
(or do the opposite to further localize school property taxes)
Encourage economic eciency,
including more ecient land use
n Place greater emphasis on user fees tied to usage levels and property taxes to fund services, especially property
taxes on land (note that some approaches to an increased emphasis on land value taxes may require a
constitutional change)
n Cap, reduce, or eliminate various types of preferential tax treatment for real property (such as exemptions and
special valuation approaches)
Q: What tax policy options exist?
December 2022
I
gardner.utah.edu INFORMED DECISIONS
TM
4
Receiving Benet
(About 12,500)
Eligible but Not
Receiving Benet
20%
80%