Most Salt Lake County residents will pay more property tax this year.
Local taxing entities are scrambling to make up a tax shortfall because of a settlement between the Utah State Tax Commission and various utility companies over valuation of property. The settlement resulted in a tax refund to those companies, which ultimately has to come out of local pockets in judgment levies not subject to public hearings.US WEST, the largest company involved, is getting a whopping $19 million refund for taxes it paid from 1988 to 1997.
Taxing entities throughout Utah - local governments, school districts and service districts - have been affected.
The shortfall amount varies, from $3.4 million for Salt Lake County government to $258,000 for the Murray School District. Some taxing entities have been able to write it off, while others haven't.
Most are opting to place a judgment levy on property taxes for one year to make up the difference.
According to state law, governments and other taxing entities must hold public "truth-in-taxation" hearings if they want to raise taxes. However, in a case such as this, where a company that has appealed its property valuation and successfully lowered it, taxing entities are entitled to impose a one-year "judgment levy" without holding the hearings.
While most government types are careful to call the increase by its technical term, "judgment levy," Salt Lake City budget director Steve Fawcett wasn't afraid to call a spade a spade. "It will appear as a tax increase," he said. "I suspect this whole thing will create anger in those who have to pay it."
The overpayment has required three of four Salt Lake-area school districts to tweak already approved 1998-99 financial plans or assess last-minute judgment levies, under advice from Salt Lake County. The State Tax Commission will confirm judgment levies are calculated correctly later this summer.
- Salt Lake City: The city is one of the hardest hit and opted to hike its taxes, since the City Council decided there wasn't anywhere it could cut costs.
"They really had no other choice," Fawcett said.
- Salt Lake County: Commissioners decided to dip yet again into the county's fund balances to make up the shortfall. The county's surplus funds are much lower than a few years ago, and the commission is taking some heat for taking the easy way out while sacrificing long-term financial stability, something Overson recognizes.
"We're on a collision course with reality," he said. ". . . I just forewarn everybody that 1999 is going to be an ugly year.
- Salt Lake City School District: The district was hardest hit by the judgment. Faced with a $2 million refund to US WEST, district officials included in its budget a judgment levy adding $9.34 in property tax on a $100,000 home. The district's $163.2 million budget was approved last week.
Before learning of the judgment, district officials had predicted a $1.50 property tax cut for the owner of a $100,000 home.
- Granite School District: Officials learned of the impending refund before its $356 million budget was approved last week, said district spokesman Kent Gardner. Owners of a $100,000 home will pay an extra $3.57 in property tax to repay the telecommunications company, according to numbers supplied by the county.
- Jordan School District: The district received word one week after its budget hearings that its tax receipts could be lower than anticipated due to the judgment, said district business administrator C. Devon San-der-son.
The Jordan Board of Education will discuss possible judgment levies Tuesday. The short-fall, expected to be $755,000, would cost the owner of a $100,000 home an extra $3.80 in property tax, Sanderson said.
- Murray School District: District Business Administrator Richard Clark said Murray District escaped any financial dings from the judgment.
"We are not going to do a judgment levy. The effect would have been minimal in our case," Clark said. "We did not make any special adjustments in our budget."
The county has estimated Murray District owes US WEST less than $258,000, Clark said. The county deducted the amount from what it owed the district. Even after the deduction, the district reaped the $11.1 million tax dollars it was counting on for its $34.9 million budget.
Shortfall due to reassessment of US WEST properties
... Revenue lost Tax increase*
Salt Lake County $3.4 million 0
Salt Lake City $1.9 million $10.34
Salt Lake City School District $2.1 million $9.34
Granite School District $835,000 $3.57
Jordan School District $755,000 $3.80
Murray School District $258,000 0
*Tax increase on a $100,000 home
Tax refunds due US WEST by county
Salt Lake $9,597,925