Until a suit is resolved, state officials will be unable to collect all the property taxes levied against two of Utah's largest railroads.
U.S. District Chief Judge Bruce S. Jenkins ruled that Union Pacific Railroad must pay only 60 percent, and the Denver & Rio Grande Western Railroad only 70 percent, of the amount the state believes they should pay.The order concerns the current assessment level in the case of Union Pacific, and the 1987 taxes for the D&RGW.
The rail lines must put the difference between these amounts and the assessment into a special account and deposit the money with the federal court clerk by Dec. 10.
Clerk Markus Zimmer undoubtedly will invest this escrow account and keep track of it until the railroads' suit against the state Tax Commission is resolved.
One of the plaintiffs, Southern Pacific Railroad, has settled with the state on some aspects of its suit.
On March 29, a state lawyer, Rex Madsen, told Jenkins that the commission's method of assessing property tax on commercial and industrial property missed the mark in 1984 and 1985. But the state is defending its later formula.
The admission that Utah once used a bad formula means the state property tax base for 1985 may have been overestimated by about $27 million for Union Pacific and by about $13.75 million for the D&RGW.
State property taxes would be divided among counties in which the railroads have tracks, terminals and other property.
Attorneys for Union Pacific and the D&RGW agree that the original calculations were wrong. But they contend that the new system is still wrong.