Property Tax – The skinny of it.

Saratoga Springs 84045 Property Taxes

With the City Council election coming up, I sent out a survey to all of the candidates to see where they stand and why they are running for office.   In the questionnaire, I had the following question:

The current status of the economy will most likely shrink the income the city takes in.  Property values are going down, which lowers property tax revenue.  People have less disposable income, which lowers sales tax revenue.  If the budget runs into a shortfall, what do you see as the most viable way to make up the difference?

One of the candidates for City Council then forwarded the survey to a member of the city staff.  I then received the following information, that I thought I would share on my blog.  Because I did not understand this correctly, I am sure that there are others that also have the same incorrect understanding.


Thanks for sending the questionnaire.  Your question #4 has one line that is incorrect.  It says “Property values are going down, which lowers property tax revenue.”  This statement is incorrect and is often misunderstood by the public.

In Utah, each taxing entity essentially receives the same dollar amount as the previous year excluding new growth.  So if a City received 1,000,000 in property taxes in 2010 they would receive the same amount in 2011 assuming no new homes were built (no new growth).  If home values go up the tax rate is automatically reduced to produce the same amount of money.  If home prices go down the rate is automatically increased to produce the same amount of money.  The City only receives new money if new construction happens or if the City Council consciously raises property taxes after a “truth in taxation” public hearing.

I should also note, as residents review their tax notice each year the total amount they pay can fluctuate up or down a little.  This happens when your home appreciates or depreciates at a greater or lesser rate than others.  For example, if the average home in the City depreciated by 5% but your home depreciated by only 2% you could see a slight increase in what you pay.  That being said, the City, County, School District, etc. would still receive the same total tax revenue.

As I mentioned above, this often misunderstood by the public.  When a candidate read me question #4 I thought I would email you so that you could modify the question, if you were so inclined.  One of the things we as City staff always strive for is that the City Council and public are making policy decisions or forming opinions based on correct information.

Your question would still be correct if you just eliminated that one line.  Sales tax is affected by changes in the economy and a declining economy will most often lead to a decline in sales tax revenue.

If you have any questions, please feel free to ask.  Thanks,

Spencer Kyle
City of Saratoga Springs
Assistant City Manager
(801) 766-9793 x112

I want to thank Spencer for sending me this info.  It helps me understand the subject of Property Tax better.