No tax hike without public's OK

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After a summer of hearing from constituents angered by steep increases in their property taxes, lawmakers are moving toward using the ballot box to cap how much local governments or tax districts can raise tax revenues.

The Legislature's Revenue and Taxation Interim Committee on Wednesday approved a draft bill that would require significant property tax hikes to win voter approval, rather than just go through a public hearing.

While the vote Wednesday is a long way from passage of the proposal, it does give it momentum going into the annual legislative session beginning in January.

The measure was endorsed on a voice vote, although at least four committee members cautioned against rushing into major changes to the state's so-called Truth in Taxation law.

Under the proposed measure, as under current law, any school district, water district, city or county could increase the amount of revenue it gets from property taxes at the rate of inflation, so long as it provides public notice and holds a Truth in Taxation hearing.

But the draft bill would add this new provision: If the taxing district wants to raise property taxes at a rate higher than inflation, it has to put the issue on the ballot and have it approved by voters.

Sen. Wayne Niederhauser, R-Sandy, said he began looking at the state's property tax system earlier this year, in part because of the outcry when residents received their property tax notices. His objective is to try to add accountability to local tax formulas.

"We need to have more people weighing in on tax increases," said Niederhauser, a developer. "I'm hoping this forces those taxing entities each year to hold a budget hearing through Truth in Taxation and increase it at a level of inflation, and if there is a reason to take it beyond a level of inflation, then the people [have to vote]."

Don Bell, a Huntsville resident who started the group Wingmen for Property Tax Reform, said it's high time the Legislature fixes the system.

"I support any way we can get the public involved," Bell said, blasting the vast and growing number of tax districts that spring up. "They're not truthful. They're out of control. They're not accountable."

Roger Tew, a lobbyist for the Utah League of Cities and Towns, said the bill could have limited effect on slowing tax increases, many of which are driven by appreciating property values. He noted only about 68 of more than 600 taxing districts had to go through the Truth in Taxation process this year.

Tew also warned the measure would erode the rights of local government.

"The challenge is, you have told counties, . . . 'that's under your control' and now you're taking control away," he said. "Where does representative democracy begin and end in that process?"

Tew added that few of the Legislature's decisions get put to a public vote.

Sen. Howard Stephenson, R-Draper, president and lobbyist for the business-backed Utah Taxpayers Association, expressed reservations about Niederhauser's bill and said he would like to give the public a chance to address it when the Legislature convenes.

Niederhauser said he hopes the potential of having to put property tax increases on the ballot gives local taxing districts an incentive to gradually increase their property taxes, rather than put off increases and let them break loose all at once.

Rep. John Dougall and Rep. Wayne Harper each presented the committee legislation that would raise the state sales tax, moving the money to local school districts on the condition that they move away from funding schools with property tax revenues. Those bills will be discussed at future meetings.