Utahns have a love-hate relationship with Truth-in-Taxation
Ronald Mortensen, Ph.D.
November 4, 2019
Utah’s Truth-in-Taxation system has a solid track record of
keeping property taxes under control. Despite that, both the general public and
elected officials have a love-hate relationship with Truth-in-Taxation.
Elected officials who rely on the property tax love the Truth-in-Taxation
system during times of economic downturn because it guarantees them a stable
source of revenue—as property values decline, the property tax rate automatically
adjusts upward to ensure that home and other property owners pay the same amount
in property taxes as during the previous year regardless of the value of their property
or their personal financial situations. Property owners who don’t understand Truth-in-Taxation
hate it during these times since their tax payments do not go down even though
the value of their property does.
On the other hand, politicians hate Truth-in-Taxation during
strong economic times because it guarantees that property owners will continue
to pay the same amount in property taxes as their home values increase, their
income goes up and inflation increases. Conversely, property owners love Truth-in-Taxation
during this same period of time.
The most common complaint expressed by local government
officials is that under Truth-in-Taxation, property tax revenues don’t increase
automatically by the same amount as inflation. They really hate the fact that they
have to go through the Truth-in-Taxation process in order to collect additional
revenue in order to offset inflation.
If these elected officials had their way, the legislature
would amend the Truth-in-Taxation law to require that property taxes automatically
ratchet up each year by the rate of inflation. That way they would get more
money from each property owner without having to go through the dreaded
Truth-in-Taxation process and they could blame the legislature for the annual tax
While that may be great for local politicians and for local government
growth, it is not so great for the average worker, small business owner or
retired person. After all, with limited exceptions, wages, small business
profits and pensions are not guaranteed to automatically increase with
Actually, there is a straight forward, honest solution to
the Truth-in-Taxation quandary faced by politicians. That is for them to effectively
manage budgets and spending rather than to be constantly looking for new ways to
spend other people’s money. Then, if additional property tax revenue is truly
needed to offset inflation, they can put on their big-boy pants, hold a
Truth-in-Taxation hearing and convince their constituents that it is in their
interest to pay more.
The problem is that politicians rarely take the straight
forward, honest path. And that is why they dream about automatic property tax
increases. That way they can blame the system for the increases and focus on
what they do best—spending other people’s money.
One final thought. If Utah’s politicians were to weaken or
abolish Truth-in-Taxation, they could end up facing something similar to
13 which bases a property’s value on acquisition cost and puts
additional limitations on the ability of state and local governments to raise
Under Proposition 13, there are no annual property assessments
so the property’s value remains frozen until the property changes ownership. In
addition, property taxes cannot exceed a certain percentage of the value of the
property, a two-thirds vote of the legislature is required to raise state
revenues, taxes raised by local governments for a designated or special purpose
must be approved by two-thirds of the voters and state lawmakers are given the
responsibility for allocating property tax revenues among local jurisdictions.
So, if Utah’s Truth-in-Taxation system was abandoned and if a
Proposition 13 were passed by the citizens, elected officials may eventually regret
it. After all, “Don't it always seem to
go that you don't know what you've got till it's gone.”