Union Pacific Railroad Company is fighting the state of Utah over hundreds of millions of dollars in tax valuation — and it could have a big impact on local governments in areas where the company’s rail, equipment, buildings and land accounts for a significant share of taxable property.
The Utah Tax Commission has assessed Union Pacific $1.5 billion in property tax valuation for 2018, but the railroad says that should only be $885 million.
A federal judge has ordered that the disputed amount — which works out to about $10.5 million in taxes — be placed in escrow until the court case is resolved.
“This will have a significant impact on many towns, school districts, counties, and special service districts throughout Utah,” Tax Commission spokesman Charlie Roberts said.
Particularly hard hit will be small communities such as Milford, Stockton, Lynndyl and Helper, among others, Roberts said.
When taxes decrease on centrally assessed properties like the railroad, taxes go up on homes and local businesses to make up the difference. Either that, or the governments affected absorb the loss of revenues.
In the case of some taxing districts, that could be a big hit. The disputed Union Pacific taxes represent a 26 percent decrease in revenues to the Millard County town of Lynndyl, according to Tax Commission records. The Tintic School District is in jeopardy of a $47,000 revenue drop — 9 percent of its budgeted property tax revenue.
Hardest hit will be the Soldier Summit Special Service District, where the $5,100 of its revenues tied up in the court battle represent 36 percent of its budgeted property tax take.
Property tax notices go out to homeowners and businesses in late October and early November. Property taxes are due Nov. 30.
Union Pacific saw a sizable increase in its Utah tax valuation this year — up $400 million from last year. It’s disputing that and more, claiming the state is trying to overvalue it by $615 million.
A Union Pacific spokesman did not immediately respond to a request for comment.
Correction: This has been changed from the original version to reflect that the the disputed $615 million is valuation, not taxes.