Republican leaders in the House and Senate are moving toward resolution of the sticky statewide property tax problem created by the infamous AMAX court decision.
But even as they work out complicated taxing formulas and consider new taxes for big business to ease the problem, they warn property taxes on some homes may go up this year.Gov. Norm Bangerter and legislative leaders believe some action must be taken or $56 million in property taxes paid by large, multicounty businesses assessed by the State Tax Commission - like mines, railroads and utilities - will be lost to schools and local governments as a result of the recent court decision.
The Legislature imposes a public school property tax that raises more than $300 million each year, so lawmakers have a financial interest in the solution.
Rep. John Valentine, R-Orem, will unveil his AMAX solution bill next week. A tax attorney, Valentine said Wednesday that his bill - standing alone - would result in a property tax shift from the large state-assessed businesses to local businesses, which are assessed by individual county assessors. However, he quickly adds that other legislators will propose "modification" bills that would impose other taxes on the large businesses, thus offsetting most of the property tax shift.
GOP legislative leaders have kept the specifics of those taxes under wraps, waiting, as they say, for a consensus to arise among their rank-and-file members. Those taxes include a gross receipts tax, severance tax on coal, a new pollution tax and others.
As expected, the large businesses - led by utilities and mines - oppose those new taxes. They argue that local business will see a property tax increase of only between 3 percent to 8 percent. Considering that the Legislature never intended to give local businesses the same tax break as homes - that came about through a ruling by a former attorney general - local business operators should be thankful for 10 years of lower taxes and take their tax hike gracefully.
Of course, no one really thinks that bitter tax pill will be swallowed so quietly.
The property tax issue is extremely complicated, causing confusion among lawmakers and citizens alike. "I couldn't believe the learning curve for legislators themselves," said Valentine. "It takes some time to understand all the implications."
Bangerter and legislative leaders hope for no overall tax increase on homeowners. However, that will prove impossible since different counties' property tax revenues are affected differently depending on how much the counties depend on property tax revenue from utilities, mines and other large businesses. For example, a solution may be reached that results in no higher taxes on homes in Salt Lake County, but homes in Utah County could see a tax hike under that formula while homes in Weber County actually see a tax decrease.
Technically speaking, lawmakers will remove the 20 percent discount now given homes and local businesses (the crux of the Utah Supreme Court's decision on AMAX). All properties will be assessed at 100 percent of fair market value. Then legislators will use a constitutional provision to give an assessment discount to primary residences of between 30 and 35 percent. The final discount level depends on what level the new "moderating" taxes are imposed on the large businesses, said Valentine.
Because of the mix of assessment decreases and tax rate changes, personal property - mainly cars and trucks - will see a decrease in property taxes through this process.