PAROWAN — Iron County property owners should start seeing their annual property tax valuation notices in the mail this week, but state and local tax officials are cautioning that potential impacts related to the COVID-19 pandemic cannot be considered a factor this year.
A news release issued by the Utah State Tax Commission on July 6 reminded taxpayers that any change in property value occurring after the state-mandated lien date of Jan. 1 will not be reflected until the following year.
“Because the COVID-19 pandemic happened after January 1, 2020, if there was any impact to your value, it will not be reflected in the 2020 valuation of your property,” the news release states. “Any impact that may occur such as a decrease in value due to the COVID-19 pandemic, would not be reflected until the 2021 valuation.”
Iron County Auditor Dan Jessen, whose office handles the appeals process through the Board of Equalization, met with Cedar City News recently to further explain how property taxes are assessed and collected each year.
Jessen said as county auditor, he collaborates with the State Tax Commission in calculating what’s known as the “auditor certified tax rate” for each taxing entity, such as a school board, a municipality or the county itself.
That certified rate, Jessen said, gives the state “the amount of revenue that they got last year, plus any new growth.”
Jessen said coming up with the rate involves “quite an algorithm.”
“So I tell them, ‘OK, based on all of the factors … this is how much revenue that you’re going to get without doing a tax increase,’” he said, adding that it’s usually “a little bit more” than the previous year because of growth.
“When I say ‘growth,’ I don’t mean valuation growth,” he said. “I mean new houses, garages added – like physical growth that will give more property tax revenue to the entities. Then they can accept that rate and the revenue that it comes with. Or they can say, ‘No, we need more revenue than that,’ which triggers truth in taxation, otherwise known as a tax increase.”
This year, none of the taxing entities within Iron County have opted to seek a tax increase, Jessen said, adding that as of the cutoff date of Jan. 1, “we were in the middle of incredible growth.”
“In fact, prices really haven’t even fallen with the pandemic. It’s just that everybody expects them to have fallen.”
Jessen went on to talk about a principle that is not widely understood: If all of the county’s property values went up by exactly the same percentage in a given year, then theoretically nobody would pay any more property taxes than they had than the previous year.
“Let’s say that Cindy Bulloch, the county assessor, increases the valuation – because it’s market driven – of every property in the county by 10%,” he said as a hypothetical example. “Nobody will pay a penny more than they did last year, because that’s the way the tax system is designed.”
However, in a more realistic scenario, Jessen said, some valuations are likely to go up 20% or higher while some are going to go up 5% and still others are going to go down in value.
In this situation, there would be “winners and losers,” he said, because even though the net increase for the entire county might still work out to be 10% on average, there will be many taxpayers whose property values are either more or less than the average.
In this scenario, anyone whose values went up by more than 10% is going to pay a higher tax, since their property values went up by an amount higher than the county-wide average.
Jessen said he encourages property owners to look at the bottom-line amount on their property tax bill rather than merely the change on the valuation amount in order to get a clearer idea of how much their bill has changed since last year.
Taxpayers who want to contest their valuations may submit an appeal to the Board of Equalization before the Sept. 15 deadline, he said. More information on that process can be found here.
“The Board of Equalization has to ignore COVID-19 for this year,” Jessen said as a reminder. “So everybody who appeals based on that will be told, ‘Sorry, by definition, there is nothing that can be done. Next year, you may have a case.’”
Copyright St. George News, SaintGeorgeUtah.com LLC, 2020, all rights reserved.