Tuesday, January 06, 2009

SLTrib: Rep. Neil Hansen Proposes to Overhaul the Value Basis of the Utah Property Tax

Once again, our most citizen friendly Utah House Representative (Neil Hansen) proposes to upset the applecart

Fascinating article in this morning's Salt Lake Tribune, reporting that Ogden home boy House District 9 State Representative Neil Hansen plans to offer a bill in the 2009 legislative session which would drastically change the basis of Utah property tax valuation. We incorporate the key paragraphs from this morning's Cathy McKitrick story below:
Outrage over skyrocketing property taxes in some counties have fueled months of discussion over how to improve the current valuation system.
While several fix-it bills are on the table, Rep. Neil Hansen, D-Ogden, proposes a major change: basing property assessments on purchase price instead of the assessor-determined fair market value.
"I've always felt the price you pay for the home is its actual value," Hansen said.
While some say such a change would require a constitutional amendment, Hansen believes the bill could be worded to avoid it.
His yet-to-be-drafted proposal would signal a significant shift. So far, it has gained little traction on Capitol Hill.
"I know there will be entities that come out against it, but I feel the discussion needs to happen," added Hansen, recently elected to his sixth term in the House. "We see people being taxed out of their homes."
In Hansen's thinking, the change would not only simplify the massive county-by-county assessment process but would also help homeowners live within their means.
Predictably, this idea is going over like a lead balloon amongst real estate development interests, as 30 year veteran real estate broker/ Leg District 8 House Representative Gage Froerer suggests in his quoted comments. The passage of a true "acquisition cost" property tax formula would certainly serve as a disincentive to new home buyers, and would also operate detrimentally to the interests of Realtors and developers.

And at first blush we also wonder how taxing authorities would handle the transition, when owners of more newly purchased properties would suddenly experience that nasty tax bill sticker shock which would inevitably come from the adoption of a "acquisition cost basis" property tax system.

On the bright side, as Rep. Hansen suggests, his proposed change in the state property tax valuation formula would be an incentive to help homeowners live within their means.

Moreover, here's something Rep Hansen fails to mention: An acquisition cost based property tax system would operate to promote that warm and cozy "family-oriented theme" which Utah legislators ALWAYS trot out in their election brochures. It would protect the interests of those family cantered property owners who've made lifelong commitments to their homes and families in their local communities, and penalize property owners whose investment in private residences is merely another short-term "investment decision." Read between the lines: It's about FAMILY VALUES, folks!

For those interested in digging in further in re this issue, we'll link to a site which provides a nice overview and discussion of the competing market value and acquisition value approaches, along with alternate informational links and other online goodies:
And for a discussion of the merits of an existing acquisition value property tax system, the obvious "go-to guy" is Howard Jarvis:
Proposition 13 Has Made Everyone's Property Tax Reasonable
As for us at Weber County Forum, we're still sitting on the fence. We see plenty of fodder for discussion nevertheless. Hopefully, the posting of these above articles will provoke some discussion on this topic.

A hearty Weber County Forum Tip O' the Hat to (homeboy) Rep. Hansen, BTW, for bringing this new tax plan to the forefront, while my pals from the GOP party are still running around in circles, and appointing committees upon committees to study the property tax issue.

Who will be the first to speak out?


Howard Jarivis Fan said...

Proposition 13 will be coming to Utah. The only question is whether our Utah legislative shills will enact this law voluntary, or whether the taxpayers will be forced to enact it by the initiative process.

Speedy said...

Why don't we collect the delinquent property taxes already on the books? There may be millions of dollars in delinquent property taxes due in Weber County at this moment. Base on a few samples taken, it could be a reality.

Why can't the Weber County Commissioners take the bit in their mouth and do something about this problem? This action would not require a new law or anything, just collect from the late payers what they owe. Must be too easy.

I remember at last years(2007) meeting in Ogden Valley when the Deputy Tax Assessor said "The biggest problem for the County is UNCOLLECTED Property Taxes".

Southsider said...

The good thing about income taxes is that, unlike wealth taxes, you have the income to pay them. But it's interesting that the main wealth we tax is the one most working families have: their home.

Maybe we should lower the tax on homes and tax other forms of wealth to make up the difference.

ozboy said...

Regardless of how the taxes are structured the real problem is still going to be incompetent, greedy, dishonest, insider dealing politicians who control (or don't) the spending of the taxes collected.

Governments at all levels are way out of control and squander huge amounts of money on all sorts of bull shit that does not directly benefit the citizens. One small example is the large lard ass Johnson cruising around in his SUV on the tax payers dime. A bigger example is the hugely expensive and failing Junktion right here in Emerald City.

What is really galling is how these SOB Utah politicians are always crowing about how well managed Utah is in comparison to the other states. That is like Southwick bragging about how honest he is because he didn't steal as much money as Madoff did.

See the back room deals said...


You are right on the money with what you said. I agree that the republicans say that this is the best managed state, BUT then I laugh about their crowing, When I drive the Levitt legacy Highway and the cost of 60 MILLION Dollars per mile, that it cost to Built. Where is the accountability of that spending?
I guess that if that is the best they can do. and call it the best manage state, IT is time for them to go. It is time to vote for the democrats.

lionel said...

Howard Jarvis, the great California tax crusader who gave that state Prop 13, was Utah born and bred.

It is too bad they don't clone him and keep him here.

Machster said...

Thanks Rudi for posting the SL Trib piece.

Acquisition Value assessment versus Utah current "Truth in Taxation" via "fair market value" assessments, with primary residential (and multiple investment or rental units also) 55% discount. Second residences and investment or "flip" properties are supposed to be taxed at 100%. Problem is, the Assessors are incapable of keeping track of which is which, thus Deputy Assessor Doug Larson's comment about unpaid Property Tax problems.

In private meetings with him and staff, the biggest (read most costly to you and me, since we must make up for these tax scofflaws) is not "delinquent taxes", but the grossly out of date, (passed in 1963) Greenbelt exemptions, and so many who cheat by claiming them falsely.

But "Acquistion Value" or "Purchase Price" valuations:...It works something like this: a base year is established or "grandfathered", say 2004. The County Assessor's "Market Value" as assessed that year (for example 2004) becomes a "basis" for residence value determination. Succeeding years, are taxed based upon an agreed upon (statutory) maximum. For example, in Oregon it is 2 1/2 percent/annum. maximum. So a residence previously assessed in say...2004 @ $125,000 as taxable value (and today is falsely inflated by Utah Realtor Association hype to $325,000 in "taxable value"), pays $3,125 instead of the bogus County/Realtor inflated $4,137 ($325K X an nominal {typical or average} .01273 certified tax rate). A savings to the resident property owner of about $1,000 a year. No "shifts" from this property owner to that property owner, and/or unpredictable BS based upon Multiple Listing Service (MLS) crap, from all the "goats in the garden" (Realtors). No tens of millions unnecessarily spent on fungo's (County Assessor's who are asked to do the impossible) pretending to know what they are doing at 29 different County Assessor's Offices. This alone would save us taxpayers hundreds of millions a year! Property Tax assessments could be done on a simple MAC or PC by a couple of administrative types. Weber County Assessor's Office is currently taking in more than 4 million a year to screw up our lives and our property taxes. Go for nominally...say $2 Million per County, and that is (2 X 29 = $58) FIFTY EIGHT MILLION, minimum, a year which could go toward Public Schools, and thus reduce the 60 to 80% of our Property Taxes being charged for Public Education. Or the 100% of our State Income Taxes which are being used for Public Education.

Fix the antiquated (circa 1963) Greenbelt Statues and we could virtually eliminate Income Taxes (as our neighors; Nevada, Wyoming, and others have done). Now THAT's how a well managed and run State is actually done the way I see things, folks.

As for those clever enough to think about selling to a relative on the cheap, it is called a non "arms length transaction", and a significant legal fine and or jail sentence is common in the 42 States or more, which have already gone from our "Truth in Taxation" unfair and inequitable Property Taxation system to some form of "Acquisition Value" or Purchase Price based valuation/assessments.

There are lots of things which need to be considered as Rudi points out via his concerns about a possible transition. But I would remind him and everyone that Howard Jarvis and his pal spent 20 years getting the amendment on the Calif. ballot and passed. That was THIRTY ONE (31) years ago! Since, some 40 plus States have gone to some form of acquisition value. Much has been learned and legislated since the original and quickly cobbled together Calif. Proposition 13 in 1978. Many States have transitioned and learned over the past thirty years. And none of them, by the way, have gone broke...quite the contrary.

And as for the Realtors, there was little or no difference since the YUPIEs tended to move around alot and generate commissions for the erstwhile iniquitous and generally nefarious Realtors (the core of home grown Realtors are just plain ordinary good folk).

And, as for Froerer's comments, they are pure bull s**t as always. Young people and new home purchasers benefit, as do retired people and everyone inbetween over the years.

Most States have a transferability clause which enables homeowners to downsize or "move on up" within reasonable parameters and keep the legacy property tax CAP (generally best set as two percent or the COLA, whichever is less).

Froerer is a lapdog of the Utah Realtor Association, which brags about how they control our State legislature via "Campaign Finance donations" and graft such as gifts, junkets, meals, tickets, etc. Their only motivation is self and money, and based upon their 6% commissions. They of course want high property turnover, to generate multiple commissions for doing little or nothing.

There is more, much more, to a well studied and reasoned AV valuation assessment approach. Rep. Hansen would do well for himself and constituents to get a group of citizens, well versed on AV valuation assessment, to work with him on this important legislative bill. It should be crafted to clearly separate the Realtor heavily influenced (corrupted) trash/garbage from the minority of honest legislators and thus enable Utah's voters to clearly measure and consider at the next election. District 8 flunked miserably!

If your legislator goes with (votes with) Froerer, unelect them. They are bought and paid for. Don't believe it check out the "Follow the money website" and see just how much the Utah Realtor Association and its shill PACs like "Utahans for Private Property Rights" (ironically) and multiples of mortgage investment bankers like Zion's Real Estate Finance and Development, etc. donate to these legislator creeps. Creeps, who make the Chicago Governor look like Abe Lincoln, by comparison.

"Pay to Play" should be emblazoned over the Utah State Capital building Senate and House of "Representatives" Chambers.

Support Hansen and "Purchase Price" based assessments. Do like I did. Register as a Democrat (but only for Utah State elections), because if you are for small, efficient, effective, transparent, and honest government...at least in Utah, where everything seems to be almost exactly 180 degrees out or directly opposite of what is "claimed" by the RINOs (Republicans in name only). This State is frankly, STRANGE in that regard at a minimum. In order to get traditional Republican values, we must vote Democratic.

Comments/objections? Again thanks to Rudi for the post. I do not expect Realtors or Developers to be happy with my having found them out and exposed them, however....

OgdenLover said...

How about having a homestead exemption in Utah? This method allows homeowners to pay greatly reduced taxes on the one home that they actually live in. This method has been working for decades (maybe centuries) in other States.

The Viking said...

OgdenLover, we have the primary residence exemption now in Utah that allows a 45% reduction on the market value of your primary residence. You only pay the tax on the other 55% of the value.

One of the problem in Utah is that some multiple property owners illegally claim the exemption on more than their primary residence and cheat the State and County out of owed tax revenue.

Machster said...

The "Homestead Exemption" IS the 45% reduction in taxable value for a single (primary) residence in Utah. And it has been around for at least a couple of decades. The legislature just chose to not give attribution or in any way credit the other States which commonly call it the "Homestead exemption".

In Utah, it seems folks (including the legislature) like to steal ideas from other States and not to "attribute" or recognize the true sources.

It's "A Utah thing". Almost as if they acknowledged or gave attribution to the source(s) it would somehow diminish them or something??? Like I said, Utah is often times a very strange place with some "strange ideas".

I will be happy to answer any questions you might have about Property Taxation in Utah, having spent a couple of years studying the systems in place and many of the variations across the Country.


Pistol Pete said...

All the ideas above are well intentioned but never see the light of day due to various agendas of special interest groups of all political views.

Why not pursue the idea I have heard of collecting the delinquent property taxes owed? If there are indeed millions out there that are owed the State and County, and delinquent, why waste time on trying to pass bills that die in the legislature? Go after the money already owed!

Pistol Pete said...

All the ideas above are well intentioned but never see the light of day due to various agendas of special interest groups of all political views.

Why not pursue the idea I have heard of collecting the delinquent property taxes owed? If there are indeed millions out there that are owed the State and County, and delinquent, why waste time on trying to pass bills that die in the legislature? Go after the money already owed!

Machster said...

Pistol Pete, ent al.

They (at least the Weber Co. Assessors) already are..."going after money already owed. They just don't have a good handle on what is owed, by whom and for what? In fact they even notified ME last week that MY property taxes are delinquent by $226???

That's the problem in a nut shell. They don't even know what is and is not owed or delinquent!

For example, in my case we appealed following the County procedures. The appeal was like thousands of others over the 2007 Property Taxes and outrageous over assessments in Ogden Valley. It is a very time consuming and unnecessary experience. They count on that and the fact most folks will just toss in the towel and over pay out of frustration and a lack of time to prepare all the paperwork necessary for the appeal process. In short it is a near perfect Utah tax scheme. The Assessor's and all the County employees (about 3,000 of them) get 9+ % pay increases disguised as 2% this and 3 % that and 5% this... The Commissioners get our money to pay political games with and occupy their time spending as
OZboy says on outrageously expensive and unnecessary projects, and the Teacher's Union gets 56% (in Weber Co.) to do likewise. All the peripheral agencies (14 of them in Weber) get their cut without having to justify or account for a single penny of our money.

The Realtors are happy because they get increased dollars from exhorbitant commissions set at 6% in Utah. Did you know that Utah is the only State that has legislatively blocked Real Estate sales using the internet? They passed a law fairly recently saying, in Utah one must physically be present to show a home, in order to shut out internet encroachment on their commissions. Internet sales are about half or less than the Utah Realtor Association monopolized 6%. Guess who wrote and jambed that legislation down our collective throats?

Back to my example; our appeal dragged out, as they always seem to do, into April of 2008, when a "hired gun", Roger Kelly, was hired to negotiate the over assessments numbering in the thousands of home owners.

The ultimate settlement was a reduction of about $60,000 in our assessment and a refund of about $550 total. The assessments for 2008 (the next year) were being done at the same time as the appeals, which left our 2008 assessments still over assessed by more than $60,000, since real property declined by 16% during 2008.

Here you need to understand the County uses "computer assisted mass reassessments", which take the prior year assessment (without any clue as to the status of appeals or Board of Equalization actions) and simply applies an automatic and mercurial value INCREASE, no matter what the actual home sales and data are. The software knows where the high water or Tax Commission audit "triggers" are and maximizes assessment valuations so they fall just hundredths of a percentage below that State Tax Commission allowable rate increase. For the past three years in a row Weber County thieves have taken about a 19% increase in Revenues from Property Taxes. The State Tax Commission "trigger is 20%. NOW JUST HOW DOES THAT HAPPEN??!!

So in 2008 our mortgage holder (America First) recieved notification that we owed about $2,833, which they payed to the Weber Treasurer (all paperwork shows this clearly). All is well and "pot's right", right? Even though we were again being over taxed.

Not so fast Moose breath! Out of nowhere, we get this letter from the Weber Co. Treasurer (just last week in Jan 2009) saying they only received $2,600 from America First (a total lie) and we owed another $226 which was "delinquent". Also incorrect, but then who has the time to go fight a three month battle with bureaucrats who alwasys must elevate to the next level of authority ad infinitum?

A call to the Treasurer's Office proved they had made errors based upon the multiple screw ups by the Assessor's office during the Appeals process. And the Treasurer's office also fouled up the facts in their "Delinquent Tax Notice" letter.

Point is...the system is a mess, based upon antiquated and outdated TNT, and legislative tampering over the years (since 1983) such that today our current Property Tax "system" is so complex and so confusing, no one at any level understands it any more.

Truth in Taxation is a "lovely" label. But in truth, it is a very bad joke which is costing everyone in this State great pain and outrageously overly assessed property valuations, which leads to grossly over taxed citizens.

But it DOES pay for the lease on the new Weber County Building and all the bureaucrat salaries inside. And it does pay for all those big gas guzzling Weber Co. Sheriff's office vehicles, and about 2300 armed Public Safety salaries and support. Ever think how much could be saved by consoliding all those municipal police forces into a singular Metro Force? And putting them in other than big gass guzzling PU trucks and SUVs?

How about a study on the real effectiveness of all those Fire Districts and Departments? How many homes have been actually saved by fire departments, versus just burned to the ground?

Hope this helps and stirs up some useful discussion/dialog.

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