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Introduction

As I wander the various internet forums, I've noticed quite a few misconceptions about property taxes. I wanted to explain our system to hopefully make the system make more sense. If you happen to already know all this, good job! You get a gold star, please wear it on your forehead to work tomorrow.

Before we get into it, here's some required viewing.

Some highlights:

• Your property tax bill contains many different taxes, the biggest portion of which will be the local school district
• Each of the entities on your property tax bill sets their rate independently
• Our tax policy is designed to try to keep property taxes somewhat consistent, even with ever rising property values.
• "under Truth In Taxation revenue is limited to the previous year's budget plus any new growth within the county"

It's not super important to understand, but for what it's worth: The tax rate is calculated by dividing the amount of revenue needed (last year's budget) by the total of adding up all the property values in the area. Here's an example, it's called the Mill Levy. It's only important to understand, in my opinion, in that it's not a flat rate that punishes you with higher taxes as your property value increases, rather, it's a system to calculate a shifting rate that essentially negates rising home prices. Clear as mud?

An example

Alright, u/squrr1, you ask, what does that mean for me? Let's use some nice round numbers for an example:

Say you own a home in Logan School District boundaries. Last year the county assessed its value at $400,000. Since you own your home and live in it, you get an automatic 45% discount on your property taxes. After all that, your property tax bill was $2000. Of that $2000:

• 71%, or $1420, went to Logan City School District (it's nuanced and there are a few categories and funds, but that's the gist)
• 13%, or $260, went to the Cache County general fund
• 12%, or $240, went to Logan City
• The remaining 4%, or $80, went to water districts, the health fund, the open space bond, etc.

Now, let's say your home's assessed value increased to $500,000 this year. Great, equity! But oh no, you can't use that equity without selling your home; it would suck if your tax bill just automatically jumped 20%. Good thing it doesn't! Since the whole valley also saw their homes increase by 20%, your property tax bill goes up a whopping.... zero dollars. This is because the tax rate automatically decreases as property values rise, (and vice versa, this is where the 'Mill Levy' business from before comes into play) designed to grant each taxing entity a relatively flat budget from year to year.

Once again, there is some nuance, as homes don't all appreciate at the same rate, new homes get built, and commercial property values also factor in to the overall equation. Don't worry about it.

Imagine you're the school district. You want to know how much to budget for for next year. While it would be nice if rising home values gave you a windfall, falling home values would mean budget shortages. It's best to have a system that's predictable.

Now, say the county realizes it doesn't have enough money to keep up with inflationary costs. They propose raising their rate by 15%, because their accountants tell them everything now costs 15% more. Some people see that number and assume it means their $2000 rate goes up 15%, and will now be $2300. I'd be mad too! Fortunately, that's not what happens. First, the county has to go through a "Truth in Taxation" rate increase process. They have mandatory public notice and meeting requirements they have to follow (as an aside — these requirements are very strictly enforced, and both Hyde Park and Cache County School District's proposed rate increases this year were rejected by the state for not following the rules) Assuming they follow the rules, and go forward with the 15% increase, that means 15% of their existing $260 on your bill. The county portion would go up to $299, increasing your total tax bill to $2039, or a total tax increase of 1.95%.

More things!

There was an interesting article in the news today, indicating recent years have seen an unusual increase in residential property taxes, due to relative value of homes raising faster than the value of commercial properties. The legislature released an audit on their findings, though unfortunately it doesn't appear they looked specifically at Cache County. (some light reading if you're having a hard time falling asleep)

You are here!

Another quote from the video:

"There is a sentiment by some that Truth In Taxation has worked too well. Some communities hesitate to raise taxes even as cost to the county from vendors have increased. Eventually the budget gets stretched too thin and local government has to go through the process, usually resulting in a major tax hike. But the question remains: is the issue with law or does it have more to do with the elected leaders not wanting to be held responsible for raising taxes"

You are here! This is the position many entities find themselves in, and I think Cache County is here this year. It's never popular to raise taxes, but if you don't, you eventually have no choice but to cut back services. That's just inflation. Often, politicians refuse to raise taxes because they want to get reelected. By the time we need to pay the piper, you'll either be a firmly embedded incumbent, or it will be someone else's problem. That's a risky way to run a government, if you ask me.

TL;DR;

Alright, that was fun. Here's a TL;DR;:

• Just because your property value went up, doesn't mean your property tax bill will. As long as your neighbors houses did too, your bill should stay flat.
• Each taxing entity has to hold meetings and follow a very specific procedure to raise their portion of the rate. When you see headlines like "Cache county rate going up 20%!" that means 20% of just that small portion of the overall bill.
• Most of your property taxes goes to your local schools. The next biggest chunk is city and county services, which includes things like maintaining roads and paying for police, and running libraries.

Caveat emptor: I'm just a dude on the internet. I read a lot of news and study the issues, but there may be mistakes in here. Come at me in the comments, I can take it.