Editor’s note • This story has been corrected and information has been added to clarify various tax rates and their impact.
The Alpine School District is seeking to increase its property tax revenue. And with rising property values in the district, its business administrator says it can do that — while cutting its tax rate from what it was last year.
But under Utah law, suggesting a tax rate that is less than last year’s rate can still be considered a tax increase. Here’s why that’s true, and what Alpine’s proposal would mean for taxpayers.
There’s an initial block on tax increases
Generally, property tax rates in Utah are based on the amount of tax dollars collected the previous year. This means that as property values rise, taxing entities can only collect as much revenue as was generated the year before.
Tax rates are forced downward to keep revenue streams the same year to year.
Overall, due to rising property values and overall growth in the Alpine School District, its tax rate has decreased by 34% since 2013.
If Alpine were to do nothing to overcome this block, its tax assessment for the coming year would be set at .005118 on the taxable value of property. That’s called the certified tax rate.
That certified rate number is shown on the property tax notice residents receive as the number listed if there were “no budget change.”
The option to increase taxes anyway
But if school districts, or other taxing groups, intend to collect more revenue than the previous year, they can enact Utah’s truth-in taxation process. That requires school boards to hold a public hearing and accept input before taking an official vote to set a new tax rate.
As one step toward that, the district has to publish the maximum rate it could charge under state law. That maximum rate is .005818 for the Alpine School District this year.
On tax notices, that’s the number used to calculate the “proposed tax due if budget approved.”
If the district wanted to charge that maximum, it would mean that the tax on a residence worth $493,000 — the average market value of a primary home in the district — would increase from $1,029.83 to $1,219.63, it said. The tax on a business of the same value would rise from $1,872.41, under the certified rate, to $2,217.51, under the maximum rate.
That maximum allowed increase would increase the district’s tax revenue above last year’s total by 13.65%.
But the district is not proposing to charge that maximum rate, said Business Administrator Rob Smith.
It has to calculate and disclose that “worst-case scenario,” but that is not what the district wants or is planning, he explained.
What does Alpine propose?
Alpine is proposing a number between the certified rate — the rate automatically lowered from last year, due to increased property values — and the maximum rate.
(Christopher Cherrington | The Salt Lake Tribune)
So the certified rate is .005118; the maximum allowed rate is .005818, and the proposal is between them, at .005518.
For the average homeowner in Utah County, the district estimates, that proposed rate would represent about $9 more a month, or $108 more per year, than the automatic certified rate.
Compared to last year’s tax rate, the proposed tax rate is a 3.6% decrease, Smith explained. It would generate an estimated $21.6 million in additional annual revenue, if passed by the school board.
But not all homeowners will see an increase in the taxes they pay, he explained, since the rate the district would actually charge would still be less than last year’s rate.
“Most taxpayers will see a decrease in taxes, because we’re recommending a tax rate less than the tax rate last year,” he said.
“If the tax rate goes down from [.005724] last year to [.005518], they will pay less tax on average,” he said. “Now again, if my home was reappraised, my value went up, then I might pay more tax even though the tax rate went down. ... Our goal is to keep our tax rate year over year flat or slightly decreasing.”
In the last two years, prices in the housing market in Utah County have skyrocketed. In 2020, the median home value was roughly $390,000, according to Zillow. Now, it’s nearly $500,000 — a 28% increase.
The last time the district held a truth-in-taxation hearing was in 2021. Alpine’s truth-in-taxation public hearing will take place on Aug. 8 at 6 p.m. in the Alpine School District Board Room, 575 N. 100 East, in American Fork. The public is invited to attend and speak during the hearing.
What would the added $21.6 million help fund?
The district intends to use approximately $4 million of the additional tax revenue to supplement programs and services that were previously funded by COVID-19 relief dollars.
“We hired a lot of supports for kids,” Smith said. “We had kids that were falling behind. There were some gaps in learning. And we identified those and provided additional supports.”
The district spent roughly $60 million of pandemic funding on support services, the majority of which went to students with special needs. But now that the funding has run out, the district hopes to maintain its level of service.
“Our special ed funding is insufficient to provide the supports we need for many of our most at-risk students academically,” Smith said. “So, part of this revenue is to provide additional paraprofessional supports in all of our special ed classrooms, self-contained schools (and) transition programs.”
The remaining dollars will fund the district’s school nursing contract with the Utah County Department of Health, a two percent base salary increase for teachers and the district’s mounting capital needs. Last year, the district proposed a $600 million bond that would have funded the construction of new schools, but voters shot it down.
“Those capital needs have not gone away,” Smith said. “We have schools that need new boilers, new roofs, new asphalt. We have schools that we need to build for the students.”
It’s a safety issue, Smith said. “If we don’t [address it], then we basically are running the risk of a failure that jeopardizes the ability to provide education for kids.”
