A constitutional problem over property taxes - which could lead to higher taxes on homes - could be solved through an accounting sleight of hand, legislative leaders now say.

No final decisions have been made, but the problem over how large mines, utilities and railroads pay property taxes - a problem that Gov. Norm Bangerter and legislative leaders fear could cost schools and local governments $50 million in revenue - may be solved by imposing new state taxes on those entities and sharing that money with local governments by creating a new, broad-based fund.The problem is very complicated. But Sen. Lyle Hillyard, R-Logan, co-chairman of the Legislature's Interim Committee on Revenue and Taxation, thinks he's found a way to keep property taxes on homes at current levels while forcing the large businesses to pick up the $50 million in property taxes they're seeking to avoid with new or higher taxes.

"We could adjust current taxes that impact those (businesses) or create a new tax," said Hillyard. The state could get around the constitutional provision of no revenue sharing between state and local governments by creating a new fund - modeled after the Community Impact Fund - which the locals could draw upon as needed, Hillyard said.

Something must be done, Bangerter and legislative leaders believe, because a recent Utah Supreme Court decision concerning AMAX Corp.'s property taxes said the large mineral company's properties had to receive the same 20 percent assessment discount that is currently given local residential and commercial property.

Large firms, like AMAX, whose property crosses county boundaries are assessed by the State Tax Commission. Local residential and commercial property is assessed by local county assessors. State law says that so-called state-assessed properties are assessed at 100 percent of fair market value. But the law also says that locally assessed properties, homes and businesses will be assessed at 100 percent of fair market value and then given a 20 percent discount. On top of that discount, state law says that primary residences will get an additional 25 percent discount.

The Supreme Court's AMAX ruling isspecific only to that firm. All other state-assessed businesses must sue and their cases decided individually. But many already have filed suit, and the State Tax Commission believes it's best to solve the problem now.

Not surprisingly, state-assessed businesses have banded together to convince the Legislature that they should get the 20 percent discount. Other property owners' tax rates would have to be increased to make up the difference, or schools and local governments would have to take the $50 million revenue cut.

In an effort to keep rates from going up on homes, Hillyard suggests that some other taxes - taxes that hit large, state-assessed businesses the most - be imposed.

That's a tricky solution. First, other taxes may not fall on individual state assessed businesses exactly the same as property taxes do. Second, the state Constitution specifically forbids revenue sharing between state and local governments, and the new taxes would go to the state, not directly to local governments.

"We could impose a graduated business franchise tax (income tax)," said Hillyard. That could be structured to hit the largest businesses in the state, most of which, but not all, are state assessed.

Because mines are state assessed, the mineral severance tax could be increased. That would directly get at the mines, but it wouldn't fall equally upon utilities and others. Finally, an impact-type fund could be created, the new taxes poured in and counties and school districts allowed to draw upon it to make up lost property tax revenue.

"My hope is the state assessed businesses will come up with a compromise of some kind. We don't want to shift the tax burden to homeowners or business owners," Hillyard said.