In talking with many of you, there is significant concern about the burden of ever-increasing property taxes, especially among the elderly. Many seniors are on fixed incomes, and property tax increases due to rising home values as the county’s population grows have created a financial hardship for them.
Some of you may remember what happened in Ogden Valley a few years ago as long-time homeowners were forced to sell, unable to keep pace with rising property taxes. Some elderly Huntsville residents had to choose between medicine and groceries or keeping their homes.
In response, the Utah State Legislature enacted forms of ‘relief’, mainly tax reductions based on low household income. These programs help but are less effective now as property values in much of the state have skyrocketed in recent years. This year, the legislature debated two enhancements: SB 26 was signed into law on March 22nd. SB 52 was defeated but has recently been reintroduced. Here is my take on both:
Through their boards of equalization, counties have long had the ability to adjust property tax for homeowners who meet certain criteria. There is an ongoing exemption for those in active military duty, disabled veterans, and those who are blind. There is also a hardship abatement under which some qualifying seniors can seek relief.
SB 26, also known as the ‘circuit breaker’, automatically extends this abatement to those 66 and older, and to widows or widowers of any age. The credit is based on a sliding scale and disappears when the homeowner’s income exceeds the poverty level threshold of $34,666. To those who qualify, it also mandates the county issue a credit equal to the tax on 20% of the home’s fair market value.
The deadline for application under this program has been extended to November 30th. Here is the link: https://www.cachecounty.org/auditor/abatement/property-tax-relief.html
Although SB 26 is an improvement, it falls short in helping many senior homeowners. To qualify for ANY assistance, they must be at or below the poverty level. Even if they qualify, the initial credit is a mere $126. Many seniors rely on pensions, social security, or other sources of fixed income that were determined years ago. As home values continue to climb, and tax assessments continue to increase, the only option for those who find themselves house-rich but cash-poor is to sell the house.
SB 52 would allow senior homeowners to defer the payment of property taxes until they either sell the home or pass away. It is not a reduction but a postponement, to be secured by a lien (plus interest). This would create a current funding deficit and a future collection nightmare for the county. It would put these public funds at risk as the collateral could be devalued by loss. Heirs would have to satisfy a compounded balance due or sell the property. Homes would be liquidated in forced ‘tax sales’ as the county scrambles to recover its losses.
Are there better solutions?
The State of Texas recently enacted sweeping tax reform, freezing the school portion of their property tax levy (77.8% in Cache Valley) for those over 65. This assessment will stay the same for the balance of their lives…with no increases. When California enacted Proposition 13 in response to the meteoric rise in property values there, it limited the tax rate to no more than 1% of assessed value (Logan City’s rate is 1.1728%), and a 2% maximum increase in a property’s assessment each year.
Many of the funding requests that make up property tax assessments are guaranteed by state statute. School districts for example, are guaranteed funding, no matter if the county’s fortunes rise or fall that year. Cache County’s revenues come from two primary sources, property tax, and sales tax. As property tax is the largest and most reliable, these assessments are generally allocated from it. Conventional thought argues that if property taxes are reduced for one, someone else must make up the difference since the total demand is fixed. Instead of redistributing the burden to others, could sales tax help?
At the helm of any viable, healthy community is a vigorous economy. Sales tax revenues grow organically through the increase in business volume as local businesses are supported by both their government (less regulation, lower taxes) and residents. When you make a major purchase out of the county, your sales tax dollars go out of the county as well. Retaining this lost revenue could go a long way toward helping fund initiatives such as this. Economic development efforts resulting in business expansion within the county could also increase general tax revenues.
As far as Utah’s Senate Bills go, we need to own our problems today, and solve them now, not kick them down the road. SB 52 would be a disaster. SB 26 however, has promise. The circuit breaker threshold could be raised to an income level more representative of most seniors in need, not just those most indigent. As an offsetting control, this initiative could be limited to one primary residence and exclude all investment properties. Another sensible filter would be requiring recipients to have lived in their homes for a predetermined period of time, beyond the current year.
Most of us feel an obligation to care for our aging population. Their hard work has contributed much to the standard of living we enjoy today. Almost every state has enacted some form of property tax relief for its seniors. Some are more equitable and effective than others, but the intent is the same. How the elderly are taken care of is a hallmark of any community. Although their burden may be great individually, it can be made small collectively.
Below are links to our county and state representatives. Send them an email or give them a call. Let them know that you support property tax relief for seniors. Share with them your thoughts on what more can and should be done. Your effort could make a substantial difference in the lives of your elderly friends, family, and neighbors. And keep in mind that you too will be there one day…
Marc K. Ensign
County legislators: https://www.cachecounty.org/countycouncil/
State legislators: https://le.utah.gov/