Understanding
Property Taxes:

 

A poll sponsored by the Utah League of Cities and Towns showed that most residents were uncertain how much of their property taxes go to their city. Property taxes can be a difficult subject to understand.

 

The purpose of this webpage is to add clarity, provide brief information and a few interesting facts about the property taxes you pay.

Join us to learn more:  

Public Open House 
Thursday, July 19, 2018 
6:00 - 8:00 pm @ City Hall
 
(If you were unanble to attend 
you;re invited to view the presentation here)
  
Public Hearing
 Tuesday, August 7, 2018
7:00  pm @ City Hall
 
Answers to Property Tax Questions:
 

How much is the proposed tax increase? How will the funds be used?

The proposed property tax increase is $300,000:

  • $75,000 to replace revenue taken by State of Utah for homelessness
  • $225,000 to add two additional police officers and related required equipment

How will the property tax increase impact me?

The proposed tax will increase the Bountiful homeowner’s total tax by 1.3%, impacting the tax bill on a $340,000 home (the average home value in Bountiful) by $19.50 per year or $1.63 per month. 

Note:  If your home's appraised value is more than $340,000, your associated property tax will also be more. If your home's appraised value is less than $340,000, your property tax liability will be less.

How can I comment on the proposed property tax increase?

Public comment will be taken during the August 7, 2018 Public Hearing which will be held as part of the regularly scheduled City Council meeting.

Your comments can also be made by email to pr@bountifulutah.gov

 

Who receives the property taxes that I pay?

The Davis School District is the recipient  of the largest portion of property tax revenue, about 62% of the total amount collected, followed by Davis County, which claims about 21%.  Bountiful City receives approximately 7% and special districts (Water, Sewer, Fire, Recreation, and Mosquito Abatement) share the final 8% of total property tax.

 

How does Bountiful City use the property taxes it receives?

Money collected from property taxes goes into the city's general fund which pays for important services such as police protection, fire and emergency services, parks, streets and signs, sidewalks and snow removal. Property taxes cover only a fraction of what the city needs in order to provide these services. In fiscal year 2019, Bountiful City will receive about $2.17 million in general fund property tax revenue. To put this in perspective, this amount is just over 1/3 of the amount budgeted for the police department alone. Sales taxes, fund transfers from Bountiful Power, grants, fines, and user fees cover the rest of the city's general costs. Collectively, these funding sources enable the city to provide necessary services for Bountiful residents.

 The property taxes from Bountiful homeowners only come to about $.13 per day, or approximately $4.10 per month for each resident.

When was Bountiful City's last tax increase?

Bountiful's last tax increase was in 2001.

How does Bountiful’s tax rate compare with other Davis County cities?

Based on 2017 rates, Bountiful has 2nd lowest individual tax rate of the 15 Davis County cities.

 

How is my property's value accessed?

Property Value: The value of your home/business property is determined by the Davis County Assessor. Property values always fluctuate. The market itself drives property values throughout the year. As homes sell, some areas go up in value, some areas go down, and some don’t change at all. The Accessor uses this information to value each property. Some property values may change dramatically in a single year, while other property values may change little or not at all. The following year the reverse may be true.

Primary Residence Exemption: In the State of Utah there is a 45% exemption on primary residential; homeowners only pay taxes on 55% of the assessed value of their home. (If the County Assessor determines that the value of a home is $200,000, and that home is the primary residence for someone, the owner would pay taxes on that property as if it was worth $110,000 (55% of the full value.) Commercial properties and secondary homes are assessed on 100% of the property value.

Why do my property taxes change from year to year?

There are a few things to keep in mind when considering how your property taxes might change from one year to the next.

  1. There is no "cost-of-living" or inflation adjustment to the property tax. The amount of money Bountiful City receives from property taxes is fixed, regardless of inflation.
  2. Unless a city holds a Truth in Taxation hearing and raises property taxes, they can only receive the same amount of property tax they received in the prior year, plus any increase from NEW development (additional property taxes from new homes or buildings added to the city). If the city wants to receive an increase in funds from property taxes, they must hold a Truth in Taxation Hearing. State law requires that if the city intends to increase property taxes a full page advertisement must be published in the newspaper and a public hearing must be held. The full page advertisement will state the impact, or estimated increase in property taxes that would be realized by the home owner.
  3. Property taxes don't go up just because the value of your property goes up. State law requires that, all other things being equal, if a home's value goes up by 15 percent, the tax rate by the city (or any other taxing entity) be reduced by 15 percent, so that the homeowner pays the same amount of taxes as the previous year. Conversely, if property values drop by 15 percent in a given year, property tax rates increase by 15 percent so that again, the homeowner pays the same amount of taxes as the previous year.

However, there are additional factors which cause property taxes to fluctuate from year to year. (Such as in the following examples:)

  • First of all, as explained under "Who receives my property tax?" and as indicated in the assoicated graph, the city is only one of several entities which can charge a property tax. If taxes go up, it is possible one of the other entities may have raised taxes after a Truth in Taxation hearing.
  • Second, as mentioned earlier, property values are assessed county wide by the County Assessor.  The city is only allowed to receive in property taxes the same amount of revenue which they received the previous year, plus taxes on new growth. So, if property values go up, the rate goes down proportionately, and the amount the property owners pay stays the same. However, consider a scenario where property values on average increased by 15 percent, but in one part of the city they increase by 20 percent, and in another part of the city, they only increase by 10 percent. The property tax rate would drop by 15 percent (proportionate to the average property value increase). But the part of the city which had a 20 percent increase in property values would pay slightly more property taxes than the previous year. The portion of the city which had a property value increase of 10 percent would pay slightly less in property taxes than the year before. This same principle applies to all agencies, such as Davis County, the Davis School District, and special districts (such as Water, Sewer, Fire, and Mosquito Abatement.)
  • Third, as some entities have bonds which were approved by voters and are paid for from property tax revenues, property taxes dedicated to the repayment of the bonds fluctuate as bond payments change from year to year.

What is a "Certified Tax Rate"?

By statute the city receives the same amount in property taxes as they received the previous year (not counting new development). While the city sets the property tax rate as a base rate, the Davis County Auditor determines the "certified tax rate" based on the previous year's assessed valuations across the entire city and the amount of property tax received. This "certified tax rate" will go up or down as needed to arrive at that "same amount of tax" figure - the rate which will give the city the exact same amount of property taxes as the prior year. The only way the city can get more property taxes than allowed by the "certified tax rate" is to hold a Truth in Taxation hearing and make a case for a tax increase to the public.

What is "Truth in Taxation"?

Truth in Taxation is a process established by the Utah State Legislature where city and county governments and school districts are required to hold a public hearing and an affirmative vote of its legislative body to increase the property taxes within their respective taxing districts.

Utah Law requires that property tax rates automatically adjust when property values increase or decrease so the amount of money Bountiful City receives is the same from year to year. In periods of inflation a government agency will receive more money from property taxes because a given property’s value increases. The laws are designed to hold property owner’s tax burden at a constant level from year to year unless the taxing entity’s legislative body votes to increase the tax through a process of notification and public hearing.

While Truth in Taxation legislation only requires a hearing be held when a city proposes a tax increase, in June of 2018 Bountiful City Council determined to hold similar reviews every year moving forward in association with the budgeting process as part of a proactive and judicious financial management plan.

How does inflation affect the base tax revenue?

There is no "cost-of-living" or inflation adjustment to the property tax. The amount of money the city receives from property taxes is fixed, regardless of inflation.  Because the base amount of tax revnue is fixed, over time Bountiful City can provide fewer services for the same tax revenue generated year over year.

Bountiful City has not raised taxes since 2001.  Due to inflation, the buying power of the tax dollars received has decreased about 30% since 2001.

Source: Bureau of Labor Statistics CPI Inflation Calculator   https://www.bls.gov/data/inflation_calculator.htm

 

 
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