Property taxes on homes will go up in most of Utah's counties and down in the rest if state senators agree with House members' solution to a sticky property tax problem created by the Utah Supreme Court.
Thursday evening, the House voted 61-11 to solve the AMAX property tax problem by raising taxes slightly on most homes, cars and small businesses. Benefiting from the court decision - and the House bill if it passes the Senate - are the large, multicounty businesses like mines and utilities.The increase would be small, stressed Republican House leaders, who have sweated blood solving the problem. The solution would raise homeowner property taxes on average less than 1 percent, and it would raise property taxes on local businesses by an average 3.2 percent.
House Democrats didn't like the Republicans' solution. They proposed a different plan, one that kept the small increase on homeowners to even less but increased property taxes on local businesses by a greater percentage.
"Let's not balance AMAX on the backs of homeowners . . . on the backs of those who can least afford it," argued House Minority Leader Frank Pignanelli, D-Salt Lake.
But, said House Majority Whip Byron Harward, R-Provo, the Democrats' plan "would also give a windfall to the state-assessed businesses (the mines and utilities) that they don't deserve."
After the Democratic plan was defeated, however, most of the Democrats joined with the Republicans for the overwhelming vote on the solution.
A Senate joint Republican and Democaratic caucus Friday morning voted in favor of the solution passed by the House.
Yet to be decided is whether special "mitigating" taxes should be levied on large businesses in an attempt to further ease the property tax shift on homes and local businesses. "My guess is those mitigating taxes (which include severance and other taxes) won't pass this body," said Harward. No mitigating tax bill had been discussed in the House Friday morning.
Democrats are opposed to mitigating taxes, and not enough Republican House members are in favor of them, either. "It scares me to think I might be reasoning like a Democrat because I oppose raising these taxes," said Rep. Lee Allen, R-Tremonton.
Gov. Norm Bangerter and GOP legislative leaders started the session hoping that such new taxes would be a part of the solution - not in retaliation for the state-assessed property owners suing the state but because they wanted the property tax shift to have as little an impact as possible on homeowners and local businessmen.
The AMAX question is complicated and confusing. Even after weeks of study, some lawmakers remain confused about the issues, with more than a few nodding off in caucuses during the explanations or just not attending.
Simply put, the Utah Supreme Court ruled in a case involving AMAX's property taxes that, for the tax law to be considered fair, the large magnesium mining company must get the 20 percent property assessment discount now given to homes and local businesses.
At risk is $56 million the state-assessed property owners now pay that they don't believe they need to pay any longer. Rep. John Valentine, R-Orem, a tax attorney, worked for weeks on a solution. His final plan, adopted by the House, reduces the $56 million in potential lost revenue from the mines and utilities to $11 million. As part of the solution, counties, which now levy different rates on cars, trucks and boats, would have to levy a uniform rate - about 1.7 percent.
That would mean that property taxes in all counties except Salt Lake County would go up on vehicles and boats, while the rate would drop in Salt Lake County.
Because the mix of state-assessed property, cars and trucks, local business and homeowner is different in each county, the solution affects each county differently as well. Homeowner property taxes would go up in 15 counties from an average of just a couple of dollars to a high of $26 in Emery County.
Taxes on cars would go up in every county except Salt Lake, where the average car's tax would go down by $4. Some counties would see hefty hikes, like an average of $29 a year in Rich County and $52 in Daggett County.
Every county would see a rise in the property taxes of local businesses - a specifically designed result that keeps tax hikes lower on homeowners. Most local businesses would see increases in the range of $50 to $200. But the average Salt Lake County business would see a $458 increase.
To offset that, however, property taxes on a business's personal property - equipment, cars and trucks - would go down, on average, in every county. In some counties, that personal property offset would actually mean an overall tax saving. But in most counties, like Salt Lake, it wouldn't be enough to compensate for the jump in real property tax increases, so business owners would be paying more property taxes.
Still not decided is if the AMAX solution would take effect in 1991 or 1992.
Salt Lake County
- Homeowner: Property taxes up about $12 a year; car taxes down about $4.
- Business: Property taxes up about $458; car taxes down about $197.
- Homeowner: Property taxes up about $7; car taxes up about $1.
- Homeowner: Property taxes down about $1; car taxes up about $6.
- Homeowner: Property taxes up about $18; car taxes up about $30.