(Editor’s note: The following story is a detailed analysis of how Tooele County Corporation prepares for and collects taxes for 19 different taxing entities in the county.)
It’s good news for some, bad news for others. The annual notices of property value and tax changes are arriving now in Tooele County property owners’ mailboxes.
While the notices bear the name of Tooele County Auditor Mike Jensen, neither he nor the county assessor, treasurer, or recorder — all who play a part in compiling the information for the annual notice — determine if your property tax went up or down.
The rise and fall of property taxes are determined by market forces, and the elected governing body of entities endowed by the state with the ability to raise, or lower, tax rates.
But despite market forces and tax rates, setting and collecting taxes is a year-long process.
Property ownership and boundaries are defined, assessed values are determined, and tax rates are adopted and applied before the county treasurer extends his hand at the end of the year to collect taxes on behalf of 19 taxing entities in Tooele County.
It all starts in the office of the county recorder where, with help from the county surveyor, the recorder records the boundaries of all parcels of property in the county.
The recorder also attaches the name and address of the owner of each parcel of property so valuation notices and tax bills can be sent to the right person.
The boundary of each parcel of property is important, not only so the assessor knows the size of the property, but the recorder must also place each parcel in the correct taxing district so the proper taxes can be applied to the property.
Tooele County’s 19 different taxing entities include the county itself, eight municipalities, the school district, six special service districts, a mosquito abatement district, one fire district, and one water conservancy.
The different combinations and permutations of taxing entities create 40 different taxing districts. Each district is a geographical area with a different total property tax rate depending on which taxing entities are included in its boundaries.
The recorder next passes his information on parcel boundaries to the county assessor. State law gives the county assessor until May 22 to determine what each parcel of property in the county was worth on Jan. 1.
That Jan. 1 property value is the value used to determine the amount of taxes due at the end of the year.
“We determine property values,” said Tooele County Assessor Wendy Shubert. “We do not set the tax rate or determine how much tax property owners pay.”
The assessed value should equal the retail value of the property, according to Shubert.
The state carefully tracks the sales price of properties and uses several statistical methods to measure how close sales prices are to the assessed value, according to Shubert.
In 2011, the average sales price of real property in Tooele County was 99 percent of the assessed value, according to the Utah State Tax Commission. The goal is to be between 90 to 110 percent.
Once every five years state law requires that a detailed on-site review of property be done by the county assessor’s office to determine the assessed value.
Between detailed reviews the assessor’s office updates property values using an industry standard survey of construction costs that is indexed by location to determine the value of structures. Land values are determined by looking at the sales price of comparable properties in the same neighborhood.
By May 22 the assessor sends the updated tax rolls and assessed values to the auditor.
The auditor, using the assessed values provided by the assessor, then computes a tax rate for each taxing entity that will result in the entity receiving the same amount of tax dollars, except for taxes received from new growth, as it did the previous year.
New growth is any taxable value that is on the tax rolls for the current year that wasn’t on the rolls the previous year.
The state tax commission approves the assessor’s calculations and the approved rate becomes known as the “certified tax rate.”
The fluctuation of the certified tax rate protects taxpayers from receiving a large bill when property values balloon. It also allows taxing entities to receive the same amount of money even when property values plummet.
Because the tax rate floats up and down opposite of total property value, the notion that taxing entities receive more money as a result of property value increases is false, according to Jensen.
However, because changes in property values may vary from neighborhood to neighborhood, individual property tax owners may find that their payments rise even though the certified tax rate decreases.
Ideally, the value of a parcel moves up and down at the same rate as the total assessed property value, and the floating tax rate means that the amount of property paid by the property owner remains constant.
However, when the value of a parcel increases greater than the average parcel, the property owner may end up owing more property taxes that year, even though the certified rate has stayed the same or lowered.
Meanwhile, somewhere else in the tax district a property owner is paying less because their property changed in value less than the average parcel.
The net taxes collected by the taxing entity remains the same as long as the taxing entity adopts the certified tax rate.
Taxing entities must adopt a tentative budget and decide if they plan to adopt a tax rate higher than the certified rate by June 22 of each year.
If they plan to adopt a tax rate higher than the certified rate, the taxing entity must go through a process defined in state law as “truth in taxation.”
Truth in taxation laws spell out specific requirements for public hearings and notices for tax increases, including the wording and size of public notices.
Truth in taxation hearings and final budget adoptions take place in August and the state tax commission notifies the county auditor by Sept. 1 that final tax rates for each entity have been approved.
By July 22 the county auditor must mail a notice of property value and tax changes to the property owner on record for each parcel of property.
The notice includes the date and time of required public hearings for any taxing entity that plans to adopt a tax rate higher than the certified rate. It also includes information on how to appeal the determination of property valuation.
By Sept. 1 final budgets are approved by taxing entities and the state tax commission gives final approval to tax rates. Then the county treasurer steps in, assuming his role as the county’s tax collector.
Tax bills must be mailed by the treasurer by Nov. 1 and taxes must be paid by Nov. 30.
Many residential property owners pay their taxes through their monthly payments to the financial institution that financed their home. The institution adds on an amount to the mortgage payments that goes into an escrow account that is used to pay the property taxes.
Property tax information is sent electronically to banks and mortgage companies, but a statement is also sent to the homeowner as it is the homeowner’s ultimate responsibility to make sure that the property taxes are paid, according to Tooele County Treasurer Jeremy Walker.
Taxes not collected by Dec. 1 are considered delinquent and a penalty is attached.
Property with taxes that are five years delinquent are sold at a sale conducted by the auditor in May or June. The property may be redeemed by the owner by payment of the back taxes and penalties any time before the scheduled sale of the property.
In 2012 the county treasurer’s office collected and distributed around $43 million in tax dollars to taxing entities in Tooele County.
In 2013 the average value of a residence in Tooele County declined from $157,472 in 2012 to $154,998, a 1.6 percent decline. However, the total assessed value of all property in Tooele County, before any discounts for economic development agreements, increased from $3.51 billion as of Jan. 1, 2012 to $3.79 billion as of Jan. 1, 2013, an 8 percent increase.
The only taxing entity in Tooele County proposing an increase in the certified tax rate for 2013 is Tooele County.
The county receives property taxes based on three different tax rates: a state rate for assessing and collecting taxes, a county rate for assessing and collecting taxes, and the county general tax rate.
The 2013 certified rate for the three county tax rates combined together is .001291. With the proposed increase in the county general tax rate, the combined total tax rate for the county will be .002176, a 68 percent increase over the certified tax rate.
The owner of a home with an appraised value of $150,000 as of Jan. 1, 2013 will pay $73 more in taxes if the county adopts the proposed tax increase instead of the certified tax rate.