Many Tooele County residents received a surprise in the mail last week and for many of them it wasn’t a good one.
Notices of Property Valuation and Tax Changes were mailed recently by Tooele County to property owners with their new assessed value and estimated taxes.
The total value of all real property in Tooele County — the stuff that people pay property tax for — leaped by 44% in 2022.
That’s not a big surprise to people that follow real estate sales. In January 2022 the median sales price of a home in Tooele County was $494,405, up 46.2% from January 2021.
That increase in value was not created by the County Council or the County Assessor. It was created by the housing market.
State law requires the County Assessor to determine the fair market value of all real property as of January 1 of each year. The State Tax Commission monitors the assessed values and sales price of real property to make sure they are reasonably close to the actual fair market value of the property.
Those January 1 property values are then used to calculate property tax rates.
Utah’s certified tax rate process or “Truth in Taxation” requires that each year tax rates are recalculated.
As property values go up, the tax rate that entities with taxing power can charge — without going through a notification and hearing process — goes down.
That newly calculated rate is called the “certified property tax rate.”
At the certified rate, property owners will pay the same, slightly more or possibly even less, than they did in the previous year, depending on how their property value changed in relation to the “average” property value change.
The idea is to allow taxing entities to collect the same amount of property tax as they did in the previous year, plus an increase from new property that wasn’t on the tax rolls the previous year.
This way each year taxing entities receive some increase in property tax without a hearing. The size of that increase depends on growth, not inflation.
In the words of Howard Stephenson, former president of the Utah Taxpayers Association and a former Utah state Senator, “Local governments should not receive an automatic 12% revenue increase simply because property valuations increased 12%. … property tax rates are recalculated every year. As property valuations increase, the tax rate is reduced accordingly so that the local taxing entity does not receive an automatic revenue increase.”
This can be seen by looking at 2022’s certified property tax rates compared to 2021’s actual property tax rates.
For example, in 2021 Tooele County’s general property tax rate for county government was 0.001266. The certified rate for the county general tax for 2022 is 0.001013, a 20% decrease. Tooele City’s 2021 property tax rate was 0.002763. The City’s certified rate for 2022 is 0.002009, a 27.3% decrease.
The only two entities at this time that are proposing to adopt a property tax rate higher than the certified rate are Tooele City and Tooele County School District.
For example, a “sample” real home in a neighborhood in Tooele City, increased from $274,219 in value in 2021 to $403,135 in 2022.
Despite a 47% increase in value, at the certified rate this property owner will pay $29 more in property tax to Tooele City in 2022 than they did in 2021, a 9% increase.
If the Tooele City adopts their proposed tax rate for 2022 of 0.002763, the same as 2021 property tax rate, the owner of the “sample” home will pay $196 more in property tax to the City than they did in 2021, a 47% increase.
The Tooele County Council adopted the certified rate for every property tax rate that they set; for the County General, the County Assessing/Collecting, County Health Department and Municipal Services property taxes. No property tax increases from the Tooele County Council.
The state of Utah increased the multi-county assessing and collecting property tax rate from .000010 to .000015.
The only other entity considering a property tax increase at this time is the Tooele County School District.
In the recent tax notice, the School Basic Levy, which is up 17.9% over the certified rate, is set by the state Legislature. The Charter School Levy is set by a formula set in state law passed by the state Legislature. The formula takes a portion of the eproperty tax collected by school districts and distributes it to charter schools, according to the number of students from the county that attend charter schools.
That leaves the School Local Levy, a combination of three property tax rates. One of those rates is a “Voted Local Levy.” As its name implies, it can’t be raised without a vote in a public election.
The other two rates are set by the local school board.
The tax notice shows that the school district is proposing a 10.5% increase in those levies over the certified rate.
The tax notice does not show the rate for the General Obligation Bond payment property tax levy. That levy is exempt from Truth in Taxation because voters approved the bond.
State law requires that the GO Bond levy be set at the amount needed to pay the principal and interest on the voter approved bonds for that year.
For 2022 that rate for the Tooele County School District is 0.0002016. It was 0.002550 in 2021.
Combined together the proposed property tax rate for Tooele County School District for 2022 is 0.008370, which is 11.8% higher than the combined certified rate of 0.007486, but 10% lower than the 2021 combined rate of 0.009296.
The Tooele County School Board was presented with a budget for the 2022-2023 year that was balanced at their certified property tax rate with $3 million in excess revenue from property taxes (remember certified rate = same revenue as previous plus an increase for new property.)
The board discussed the possibility of using the $3 million of unallocated revenue for the building of a new junior high school that was included in the 2020 bond passed by Tooele County voters.
The proposed $170 million bond included revenue to build a high school in Overlake, a junior high in Stansbury and an elementary school in Grantsville. The elementary school will open this fall. Ground was broken for the new high school earlier this year.
The school district is issuing the new bonds as old bonds are paid off, resulting in no net property tax increase for property owners for the bond.
But long story short, due to an unprecedented increase in construction costs, the school district announced in March 2022 that they anticipate being around $55 million short in revenue from the bond to build the new junior high school after the elementary and high school are paid for.
The school board discussed adopting a 2022 property tax rate that would be about halfway between the certified rate and last year’s rate.
The proposed rate would increase the property tax on the average home in the school district, valued at $460,000, by $160. It would generate about $5.2 million in unallocated revenue that could then be put towards the new junior high.
If you want to attend the public hearing for the city or school district’s proposed budget increase, Tooele City will hold their public hearing at 7 p.m. on Aug 3, at Tooele City Hall, 90 North Main Street in Tooele City. The Tooele County School District will hold their public hearing at 6 p.m. on Aug. 9, at the Tooele County School District Office at 92 Lodestone Way in Tooele City.