Keeping an even keel

From time to time, people can be heard wishing that government would budget more like average household does. Sometimes, however, the opposite can be true.

In Utah, people these days are trying to recover from the shock of seeing their home valuations skyrocket on their county property-tax notices. For many of them, their overall tax bills are rising as well. What they often don't realize is that there isn't necessarily a connection. Property taxes rise because various taxing entities raise them, and in a public way. It is illegal in Utah for local governments to collect more money simply because home prices are climbing.

Years ago, state lawmakers passed what has come to be known as the truth-in-taxation law. Simply put, if governments want to collect more money from property taxes, they have to declare a tax increase and hold public hearings. Those are never pleasant experiences for politicians.

Those governments are allowed to capture extra money from the taxes generated by growth, but not much else. (Of course, equalizing tax rates across a broad spectrum can lead to some people paying more or less from year to year, depending on where they live.)

Times like these prove the value of such a law.

Home prices are rising in Utah. In Davis County alone, they went up by 20.5 percent during the last quarter. Nationally, however, the trend is exactly opposite. If, as many observers note, Utah is behind national trends in recent property values, a downturn is ahead here, as well. Already, the number of homes being sold in Utah have begun to decline.

Without the truth-in-taxation law, Utah's cities, counties, school districts and other local governments would be taking advantage of good times to expand wildly, only to panic later as the economy fluctuates in the opposite direction. As it is, property-tax rates will have to be equalized to keep things on an even keel.

Compare that to the way a lot of homeowners act during good times, extending themselves through home-equity loans to pay for frivolous things.

A report two years ago by the Joint Center for Housing Studies at Harvard University found that earlier generations of Americans typically had their homes paid for during middle-age. Now, however, people are beginning to carry substantial mortgage debt into retirement.

If home prices decline, a lot of people will be left owing much more on their houses than what they are worth. They will be unable to sell those homes to escape their debts, and their living standards will decline. They have lifestyles that can be sustained only by prosperous times.

Not all people are in this situation. But those who are would be better off making decisions the way Utah governments must do by law.