Is Utah next for a cap on home tax?
Her property, which in 2006 had been worth $363,000, was assessed this year at $501,000. Her tax bill for this year is expected to be $3,243 — $900 more than in 2006.
Four property-tax increases and a reappraisal will do that to you.
But Egbert isn't worried about herself, she recently told county commissioners, because she has rental properties that provide an income. Instead, she's concerned about 25 widows on fixed incomes in her neighborhood, who don't know how they're going to make ends meet.
The solution, many would argue, would be for the Utah Legislature to enact a Proposition 13-type law that would cap the rate at which local governments can tax properties.
Prop. 13, as it's commonly known, was passed by 65 percent of California voters in 1978 following a wave of rising values and windfall revenues for local governments.
One of its proponents was Magna native Howard Jarvis, who, after the measure was passed, started a tax-reduction advocacy association, now known as the Howard Jarvis Taxpayers Association.
That's the sentiment various residents expressed when they crowded into Farmington Junior High on Aug. 9 to voice disapproval of their property taxes.
Kline said his organization didn't originally support Prop. 13 but has since changed its tune.
"We have learned that it has been very good for the state of California," Kline said. "The main reason is that it keeps people from being taxed out of their homes."
According to the Howard Jarvis Taxpayers Association, 400,000 residents in Los Angeles didn't pay their property taxes one year because they couldn't afford to and risked losing their homes.
How it works
Proposition 13 set the tax rate at 1 percent throughout California and limited tax increases to no more than 2 percent a year, according to the Howard Jarvis Web site, www.hjta.org.
But once a property is sold, it is reassessed and the new homeowner pays 1 percent a year on the purchase price of the home. The same 2 percent cap on tax increases applies.
"As a result, new buyers are always aware of what their taxes will be and know the maximum amount property taxes can increase each year for as long as they own the property," according to the Howard Jarvis Web site.
Kline, with the California Taxpayers' Association, says Prop. 13 has allowed property-tax revenue for local governments to increase an average of 7.5 percent a year over the past 29 years.
And homeowners get to stay in their homes.
Egbert said her son, who lives in San Diego, owns a $600,000 to $700,000 home and pays $2,000 or so a year in property taxes.
Such stories are common.
But if he were to move to a larger home, which he wants to do, Egbert's son would be handed a $7,000 to $8,000 tax bill for the year.
"I know it has hindered him, and I'm sure it does a lot of people who live there," Egbert said.
Starting off in a new home with such a high tax bill could make such a move cost-prohibitive.
Kline agreed but added that someone who sold a home for $700,000 likely would have enough equity to afford higher taxes.
"We definitely know taxes influence behavior," he said. "It's a factor. It's not the critical factor."
Gerald Prante, an economist with the Tax Foundation, based in Washington, D.C., said people have to remember there's no free lunch.
Residents have to ask themselves, "Are services worth what you're paying?" he said.
"When you restrict local governments, there is more state control over those services," Prante added.
County governments in Utah are responsible for running sheriffs' offices, operating jails and prosecuting crimes; funding health departments, public works, libraries and animal control; managing land and property documents; appraising property; and collecting taxes.
"People don't want to get rid of it once they have it," Prante said of government services.
People may like a service government provides, but they don't like high property taxes, he added.
Proposition 13 aimed to curb high taxes.
Dan Mitchell, a senior fellow at the Cato Institute, based in Washington, D.C., said, "Whatever the case, there's an argument in making sure you design it (a Utah version of Proposition 13) as well as possible."
Kline said there have been cases where local governments have increased user fees for residents when the government didn't project getting enough revenue from property taxes.
"You have to make sure government doesn't unravel the benefits," Mitchell said.
Ron Mortensen, a Bountiful resident and co-founder of CitizensForTaxFairness.org, said the solution for Utah might be Proposition 13, and it might not be. It could be some variation on the California law.
"We need to look at a Utah solution," he said. "We need to look at what makes sense in Utah."
He said people are often worried about senior citizens, and they should be, but young families may be hit extremely hard by a tax increase on top of rising property values.
"If you get hit with a $400-a-year property-tax increase, to a young couple that's a lot of money," Mortensen said.
The current process for equalization (appealing one's property values) and truth-in-taxation works well, but only if an entire county is assessed equally every year.
Currently, in Davis County, only about one-fifth of the county is assessed each year. And that one-fifth tends to see increases tied to rising property values.
County leaders have promised they're working on a solution.
One thing's for sure, Mortensen said.
"I've never seen people so mad," he said. "People are ticked off."
He said Utahns should expect to see a citizens movement this fall to help legislators come up with solutions.
E-mail: jdougherty@desnews.com
Recent comments
Attn: Utah Tax Slaves - Do not attempt to pass a Proposition 13 in...
WL | Sept. 19, 2007 at 12:32 p.m.
I LIVED IN CALIFORNIA & WAS ONE WHO VOTED FOR PROP 13. I THEN LIVED...
LYNDA HOWARD | Sept. 11, 2007 at 6:16 p.m.
I built my house 5 years ago for $200,000. I certainly wouldn'...
Casey | Sept. 4, 2007 at 10:21 a.m.
