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Why Have My Property Taxes Increased?

Police and Granite School Increases Have Upped Your Property Taxes

MILLCREEK. A big topic on social media this week has been the property tax notices we all received in the mail. Most of us will be paying more this year, but contrary to some opinions, it’s not because Millcreek incorporated.

The biggest two increases in our property taxes are due to to the Salt Lake Valley Law Enforcement District (SLVLESA) (the taxing district that funds the Unified Police Department) and to Granite School District. Their proposed rate increases are 9% and 15% respectively. Dollarwise, on the notice below, you see the taxpayer paying $50.97 more to SLVLESA and $194.70 more to the Granite School District. These increases eclipse the total of the remaining proposed increased taxes. (SLVLESA’s explanation for the increase is here.  For an explanation for the school district increase, click here.).

example property tax notice Millcreek 2017

The line for “Millcreek City” shows a .000680 tax rate, with a 0% increase in dollars collected. This is the same tax identified in last year’s notice as “SL County Municipal SVCE”). (“SVCE” is an abbreviation for “service”.) That tax was transferred to Millcreek after we incorporated. The rate was certified by the state tax commission and the County as being Millcreek’s portion of the tax the County collected last year. (The remaining fees charged by Salt Lake County on your tax notice are assessed county-wide, and were not transferred to Millcreek. Click here for the County’s adjusted 2017 budget.)

How our individual property taxes can go up or down is complicated. Utah law requires taxing entities (cities, schools, counties, districts) to collect only the same amount of property tax as they did the year before. That means that the only way the taxing entity can collect more money is to hold a public hearing to explain the proposed rate increase and hear what the taxpayers have to say about that. See generally, Utah Code Title 52, Chapter 2, Part 2 and Part 3. That’s the “Truth in Taxation” process we’ve all heard about. (Our opportunities to weigh in on this year’s proposed increases are the meetings shown in the last column of our tax notice.)

Each individual tax bill has also likely changed because of the revaluation of our properties. Absent a Truth in Taxation hearing as described above, each taxing entity can collect only the same total amount of property tax as it did the year before. That means if property values as a whole rise, the tax rate charged on all properties must be reduced. Otherwise, the total tax collected would go up. But individual properties rise or drop in value at different frequencies. As a result, applying the new tax rate to all of the properties within the taxing district can result in higher property taxes for one home and lower taxes for another.

Millcreek aerial

Illustration: A taxing entity charges a .0100000 (1%) tax rate. A home valued at $400,000 pays $4,000. Another home valued at $150,000, pays $1,500. Combined, the taxing entity has raised a total of $5,500 from these two homes.

The next year, the first home’s value increases to $500,000 and the second home is now valued at $160,000. To generate the same $5,500, the taxing entity’s rate must be reduced to .0083333 (calculated by dividing 5,500 by 660,000). While both homes have increased in value, the law redistributes who pays what. The first home’s property tax is increased to $4,167 ($500,000 multiplied by .008333), while the second home’s property tax is decreased to $1,333 ($160,000 times .008333). In spite of these individual fluctuations, the taxing entity still receives only $5,500 and there has been no tax increase.

Applying these principles to thousands of homes across our city, with more than a dozen entities collecting taxes, you can see why your individual property taxes change from year to year, sometimes dramatically. However, any change this year is not due to the City Council. Millcreek has not raised property taxes, but is collecting only the same amount that all Millcreek taxpayers collectively paid to the County last year for “Municipal Service.”