Over the past 10 years, Utah’s property taxpayers have been under taxed $100 million according to a recently published report by the State Auditor’s Office. According to testimony before the Legislative Revenue and Taxation Interim Committee, the Auditor’s Office pinpointed the taxing error on the accounting of RDA projects in the calculation of property tax new growth.
Apparently, reappraisal values for RDA projects have been double counted for years resulting in a reduction of rates 0.01 to 0.02 percent throughout the state. These issues won’t need a legislative solution to fix, but can be handled through tax commission rule. (More information on the study can be found at both the Deseret News and the Salt Lake Tribune.)
Another item of discussion in the study was the role that centrally assessed property and business personal property play in the calculation of new growth. According to the study, “New growth is currently calculated as the value of new real property plus any change, positive or negative, in the value of personal and centrally assessed property excluding the value of redevelopment projects.” Questions about whether or not business personal or centrally assessed property should be included in the calculation of new growth were raised in both the study as well as in the committee.
In recent years, centrally assessed property has had a positive effect on new growth numbers. In a number of years and in a number of jurisdictions, it has had a negative effect. Decoupling centrally assessed property from the calculation of new growth would likely result in smaller new growth numbers over time. Removal of business personal and centrally assessed property from the new growth calculation would affect all property taxing entities (schools, counties, cities, and special districts). Care should be taken to determine the impact such a change might have before any legislation is passed.
The Legislative Committee, though, passed a motion to direct their staff to draft legislation that would do just that. We’ll add this to the growing number of issues UAC is tracking this interim.