OCR Text |
Show Increases Exemptions for Residential Property Under the current Tax Article all property, unless exempted, is to be taxed at a uniform and equal rate. Therefore, property taxes on residential property must be levied at the same rate as all other property. The Legislature may currently exempt from taxation only $2,000 on the value of a home. The proposed revision would change the exemption and allow the Legislature to exempt up to 45 of the value of residential property. The Legislature has already passed a bill tied to the passage of this amendment which exempts 25 of the value of a residence from property taxation. e) Removes the Limit on Disabled Veterans Property Tax Exemption Currently the Constitution allows a property tax exemption of $3,000 on property owned by disabled veterans. The proposed revision would remove the $3,000 limit and allow the Legislature to establish the exemption level to be given disabled veterans. d) General Tax Amendments The remaining changes in the proposed revision do not deal specifically with the property tax. Rather, they relate to general tax policy and procedure. a) Allows Local Governments to Share Revenue Past legal opinions indicate that Article XIII, Section 5 prevents the local governments from sharing their tax revenues with each other. The proposed revision would alter this prohibition and allow local governments at their option to share tax revenues. b) Removes the 75 Limit on the State Funding of the Minimum School Program The Constitution (Article X) requires the Legislature to establish and maintain a uniform public school system. However, in paying for the school system, Article XIII, Section 7 requires that not more than 75 of the total cost of the operation and maintenance of the school program be paid by the State. The remaining 25 of costs are raised at the local level through property tax levies. The proposed revision would remove the 75 limit on the state contribution for the school program. The Legislature, if it wished, could then fund more than 75 of the cost of the school program from state revenues. cj Provides for Organizational Changes in the Tax Article The Tax Article has been amended over a dozen times since its original enactment in 1896. The result is that the Article is not well organized. References about assessment are included with references to exemptions. Language pertaining to taxation is even contained in the Legislative Article (Article VI). The proposed revision rearranges the order and provides subheadings within sections to make the Article easier to understand. Effective Date approved by the voters, would effective beginning January 1, 1983. This amendment, if FISCAL EFFECT In estimating the fiscal impact of the passage of the Revenue and Taxation Article voters should be aware of legislation that will be enacted or repealed by the passage of the amendment. If the amendment passes, H.B. 142 (1982), which provides for a 25 exemption of residential property will become law. The present law, H.B. 164 (1981), exempting 20 of all locally assessed property, which is being challenged in court, will be repealed if the Article passes. Assuming that mill levies remain at 1981 levels, the following are three estimated fiscal impacts of the passage or failure of the amendment: i the Tax Article passes there will be (a) a decrease in residential property taxes of approximately S 12 million; (b) an increase of approximately S20 million from property taxes on local commercial and industrial properties; (c) no change in state assessed property taxes (mines, utilities and railroads); and (d) a reduction in the state contribution to the minimum school program of S3 million. 1. If 2. If the Tax Article does not pass and the current law on locally assessed exemptions withstands court challenge, there would be no change in revenues to state and local governments based upon 1981 mill levies. 3. If the Tax Article does not pass and the current laws on locally assessed exemptions are not upheld by the courts, then the reduction of 20 in the assessment levels of residential and local commercial property would be eliminated (or alternatively, state assessed property values would be lowered 20). Passage of the Article would repeal H.B. 164 (1981) and eliminate the 20change in assessments arising from the legal challenges through implementations of H.B. 142 (1982). The other provision of the Tax Article are permissive in nature, requiring action by the Legislature andor local governments to take effect. Therefore revenue impacts for these provisions cannot be estimated. Jon M. Memmott, Director Office of Legislative Research' State Capitol Salt Lake City, Utah 84114 |