Marc K. Ensign has been a community and business leader for many years and lives in Paradise.
In conversations with many of you, there are significant concerns about the burden of ever-increasing property taxes, especially among the elderly. Many seniors have steady incomes, and the rise in property taxes due to rising property values as the county’s population grows has placed them in dire straits.
Some of you may remember what happened in the Ogden Valley a few years ago when longtime homeowners were forced to sell because they couldn’t keep up with soaring property taxes. Some elderly Huntsville residents have had to choose between medicine and food, or keep their homes.
In response, the Utah state legislature enacted forms of “relief,” primarily tax breaks for low household incomes. These programs are helping, but are less effective now as property values have skyrocketed in much of the state in recent years. This year the legislature debated two extensions: SB 26 came into force on March 22nd. SB 52 was defeated but was recently reintroduced. Here are my thoughts on both:
Through their compensation offices, the districts have long had the opportunity to adjust property tax for homeowners who meet certain criteria. There is a perpetual exception for those on active military service, disabled veterans, and those who are blind. There is also a hardship regime under which some qualified seniors can take advantage of relief.
SB 26, also known as “circuit breaker”, automatically extends this reduction to people aged 66 and over and to widows or widowers of all ages. The credit is based on a sliding scale and disappears when the homeowner’s income exceeds the poverty line of $ 34,666. For those who qualify, it also requires the county to issue a credit equal to the tax on 20% of the home’s fair market value.
The application deadline for this program has been extended to November 30th. Here is the link: https://www.cachecounty.org/auditor/abatement/property-tax-relief.html
While SB 26 is an improvement, it does not help many older homeowners. To be eligible for ANY assistance they must be at or below the poverty line. Even if they qualify, the initial credit is only $ 126. Many seniors rely on pensions, social security, or other fixed sources of income that were established years ago. As property values continue to rise and tax bills continue to rise, the only option for those who find themselves rich but poor in cash is to sell the home.
SB 52 would allow senior homeowners to defer paying property taxes until they either sell the home or die. It is not a reduction, but a deferral, which is to be secured by a lien (plus interest). This would create a current funding deficit and future collections nightmare for the county. This would jeopardize these public funds as the collateral could be devalued by losses. Heirs would have to pay a compounding amount due or sell the property. Homes would be liquidated in forced “tax sales” as the county strives to recoup its losses.
Are there any better solutions?
The state of Texas recently passed a major tax reform freezing the school portion of their property tax (77.8% in Cache Valley) for those over 65. That assessment will remain the same for the rest of their lives … with no increase. When California issued Proposition 13 in response to the meteoric rise in property values there, it capped the tax rate to no more than 1% of appraised value (Logan City’s tax rate is 1.1728%) and a maximum increase in a property’s valuation of each 2 years.
Many of the funding applications that make up property tax assessments are guaranteed by state law. Funding is guaranteed for school districts, for example, regardless of whether the district’s wealth rises or falls that year. Cache County’s revenue comes from two main sources, property tax and sales tax. Since the property tax is the largest and most reliable, these assessments are usually derived from it. Conventional reasoning has argued that if property taxes are lowered for one, another must make up the difference since aggregate demand is fixed. Could sales tax help instead of redistributing the burden?
At the head of any viable, healthy community is a strong economy. Sales tax revenue grows organically as business increases, as local businesses are supported by both their government (less regulation, lower taxes) and residents. If you make a major purchase outside of the county, your sales tax dollars go out of the county as well. Withholding this lost revenue could go a long way in funding initiatives like this one. Economic development efforts that lead to business expansion within the county could also increase general tax revenues.
As for the Utah Senate bills, we must embrace our problems today and solve them now, not step them out into the streets. SB 52 would be a disaster. However, SB 26 has promise. The breaker threshold could be raised to an income level more representative of most needy seniors, not just the poorest. As a balancing control, this initiative could be limited to one main residence and exclude all investment properties. Another useful filter would be that the recipients have lived in their apartment for a specified time beyond the current year.
Most of us feel obliged to take care of our aging population. Your hard work has contributed a lot to our standard of living today. Almost every state has some form of wealth tax relief for its seniors. Some are more just and more effective than others, but the intent is the same. Caring for the elderly is a hallmark of every community. Even if their burden may be large individually, it can be kept small collectively.
Below you will find links to our district and state representatives. Email them or give them a call. Let them know you support the senior wealth tax break. Share your thoughts on what else can and should be done. Your efforts can greatly improve the lives of your older friends, family, and neighbors. And remember that one day you will be there too …
Marc K. Ensign
District legislature: https://www.cachecounty.org/countycouncil/
State Legislators: https://le.utah.gov/