Wednesday, October 31, 2012

West Valley City to hike property tax 18% to cover budget gap. (West Valley City Owes $185 million to UTOPIA. PAMELA MANSON. THE SALT LAKE TRIBUNE. AUGUST 10, 2011.

"Councilman Russ Brooks passionately countered comments made at the hearing by State Sen. Howard Stephenson, R-Draper, who is head of the Utah Taxpayers Association.
Stephenson, who strongly opposed the tax hike, criticized the fact that West Valley City owns the Maverik Center and a fitness center that compete against facilities in the private sector.
"This is crazy. I've never seen anything like it. I just plead with you. Stop the direction you're going," Stephenson said."
West Valley City • The City Council on Tuesday approved an approximately 18 percent property tax hike that is projected to generate about $3.5 million more a year and cover a budget gap.

At the conclusion of a public hearing, council members voted 6-1 for a fiscal 2012 budget that includes the tax increase.
The dissenter was Mayor Mike Winder.
"I would have preferred each department take a 5.8 percent decrease than see property taxes raise 18 percent," he said.
Council members said the increase was necessary to provide needed services.
"For the services I receive, that's a fair price," Councilman Steve Vincent said.
Two speakers at the hearing supported the increase, while about a dozen spoke against it.
Sen. Howard Stephenson, R-Draper, head of the Utah Taxpayers Association, opposed the increase.
"I have never seen a budget and a city so off-track as West Valley City is," Stephenson said.
Councilman Russ Brooks challenged Stephenson's criticisms, saying the services provided to the citizens have turned West Valley into a "first-class city."
"We're not here just to raise taxes. We're here to provide services," Brooks said to the applause of many in the audience.
The increase will cost $5.87 per month, or $70.44 a year, on a home valued at $185,000. A business valued at $185,000 will pay $10.68 monthly, or $128.16 annually. Homes are taxed at 55 percent of their value, while businesses are taxed at 100 percent.
The city's most recent property tax increase was in 2006. The fiscal 2012 budget is approximately $63.6 million, about the same amount as in fiscal 2011.
West Valley City administrators say they have cut back and economized as much as possible during the recession and further cuts would erode the gains in the quality of life made in the past decade.
Some speakers Tuesday, including Stephenson, said they were concerned about the city's spending on UTOPIA.
UTOPIA, short for Utah Telecommunication Open Infrastructure Agency, was organized in 2002 by community leaders statewide who believed the private business sector was unwilling to bring high-speed Internet and other broadband services to their cities. Eleven cities have pledged more than $500 million over 32 years to back bonds to finance network construction. The pledges are based on population; the biggest municipality is West Valley City, which will pay almost $4 million in fiscal 2012 toward its total obligation of $185 million.
City Manager Wayne Pyle said even without the Utopia payment, city administrators would have considered a tax increase to address "all kinds of unfilled operational and capital needs" due to the economic downturn. —
Where does the money go?
West Valley City has created an online calculator that estimates property tax bills based on the appraised value of a home, lists taxing entities and breaks down how the money is used. For example, the estimated property tax of a home appraised at $185,000 is $1,720.90, with the city's tax totalling $458.49. Of that amount, 31.46 percent is put toward police services and 12.89 percent goes to firefighting. The calculator can be found on the city website,  Pamela A. Manson Salt Lake Tribune. August 10, 2011.

West Valley City's UTOPIA tax increase moved them to the highest property taxes in the state!

West Valley City • Russell Eastman lives on a street of tidy new homes worth about $200,000 each. His corner of West Valley City — between 5600 West and 7200 West from 2100 South to 2700 South — has industrial areas, mobile home parks, farms, a new WinCo and Rocky Mountain Raceways.
That slice of the city also has the highest property taxes in Utah.
“I knew taxes were high here, but I didn’t know they were the highest,” Eastman said when told of his community’s dubious distinction. “I thought the place with the highest taxes would be an area with, well, great big houses, not a place like this.”
Local governments in the area stack a pile of high separate property taxes on residents. West Valley City has among the highest charged by cities. Granite School District has among the highest for schools. The Magna Water District has relatively high taxes for water. And additional taxes are charged by a mosquito abatement district, two water development agencies, a library system and Salt Lake County.
They combined to give Eastman and his neighbors the worst news among Utahns as annual property tax bills arrived during the past two weeks. Taxes in that community are $2,135 on a $200,000 home — or $1,501 more than a similarly valued home in Utah’s lowest-taxed area, unincorporated Wayne County.
The median among the state’s 1,389 separate property tax areas this year — created by the crisscrossing boundaries of all its local governments — is $1,509 on a $200,000 home, up 2.8 percent from last year, according to a Salt Lake Tribune analysis of State Tax Commission data.
Taxpayer revolts • That uptick comes as 23 local governments — about one of every 20 in Utah — raised taxes this year.
That is about half as many as usual.
Perhaps governments sensed that residents struggling in a tough economy were in no mood for higher taxes this election year.
That is especially shown by what happened after the Utah County cities of Orem and Highland initially adopted big tax hikes. “They saw a taxpayer revolt,” said Royce Van Tassell, vice president of the Utah Taxpayers Association.
Orem adopted a 25 percent hike — decreased from an initially proposed 50 percent increase after 600 angry residents protested at a Truth in Taxation hearing that lasted until 2:30 a.m. Highland upped its property taxes by 58 percent.
However, thousands of upset residents in each city then signed petitions to create ballot referendums on those increases. Certification of signatures came too late for them to appear on ballots this year, so the increases have been put on hold until voters can determine their fate at the polls next year.
“I’ve seen some tax increases opposed quite vigorously” in the past, Van Tassell said. “But these are the only two where people have been so upset that they have put together a referendum.”
Elsewhere this year, four local governments abandoned proposed tax hikes after feeling heat from voters in required Truth in Taxation hearings.
That occurred in Harrisville (which had proposed to double taxes), Hurricane (which dropped a proposed 14 percent hike), the Summit Council Municipal Type Service Area (which punted a 52 percent hike), and Monticello (which not only dropped a proposed a 6.6 percent hike, but then actually lowered overall taxes by 1 percent).
Additionally, Uintah city, in Weber County, slashed a proposed 76 percent tax jump to 46 percent after its Truth in Taxation hearing.
All that shows “Utah’s Truth in Taxation system really has become a model across the country for limiting spending and tax increases,” Van Tassell said. Under the law, local governments proposing tax rates that would generate more revenue than the previous year plus inflation must advertise and hold public hearings.
Tax increases • Tax hikes that were approved this year range from the high of adding a new $220 tax on a $200,000 home in unincorporated Salt Lake County — to replace a much-despised police fee — to a low of a $2.20 increase by West Valley City. A list of all increases is online at
Other increases of note include: Mantua, Cache County, a $105 increase on a $200,000 home (a 37 percent hike); Hatch, Garfield County, a $99 increase (up 67 percent); Tooele School District, $93 (up 9 percent); and Manila, Duchesne County, $88 (up 119 percent).
“We have not raised our taxes since the 1980s,” Manila Mayor Chuck Dickison, whose town has the state’s largest increase when measured by percentage, said recently to explain such tax hikes.
“We try to treat our citizens well, and it [not boosting taxes] has come back to haunt us. We just can’t sustain it any longer.”
He said the increase will help with needed road maintenance, water system costs and a new fire station.
“We have to catch up to do our roads and pay our bills,” he said.
In another example, the Salt Lake City Suburban Sanitary District No. 1, covering much of Salt Lake Valley’s east side, enacted a 90 percent increase, even though that amounts to a small-sounding $20 on a $200,000 home.
“We haven’t increased our taxes in over 20 years,” Kerry Eppich, its general manager, said recently. But “most of our lines are over 30 years old, with quite a number that are over 50. It’s getting to the point where we need to do some rehabilitation.”
Why some areas are high • Areas with the highest taxes in Utah — like Eastman’s corner of West Valley City — tend to be where numerous local governments’ jurisdictions overlap, including cities, counties, schools, water districts, mosquito abatement districts, cemetery districts, library districts, recreation districts or more.
Other areas with the state’s highest overall property taxes include: a southwest corner of Salt Lake City that is in the Magna Water District, $2,134 on a $200,000 home; a slice of Ogden that is in the Uintah Highlands Water and Sewer Improvement District, $2,103; the portion of Traverse Ridge in Draper that is in Salt Lake County, $2,084; and Hildale, the polygamous enclave in Washington County, $2,074.
Areas with the lowest taxes tend to have few local governments that stack taxes on top of one another — and where residents may depend on private wells and septic tanks instead of water and sewer districts.
Rural Wayne County has the six lowest-rate property tax areas in the state. In the lowest, its unincorporated area, residents pay taxes only to Wayne County, its school district and the Wayne County Water Conservancy District.
Taxes in 15 largest cities • Even though taxes can vary greatly within individual cities because of crisscrossing local district boundaries, large sections of them often tend to have the same tax rates.
The Tribune compared taxes among such typical areas for the state’s 15 largest cities.
The most expensive typical areas in those largest cities include: Ogden, $2,108 on a $200,000 home; West Valley City, $1,885; and Salt Lake City, $1,762.
The lowest such areas among the 15 largest cities are: Murray, $1,321 on a $200,000 home; Provo, $1,334; and Orem, $1,382.
Others include: Taylorsville, $1,674 on a $200,0000 home; Draper, $1,669; Layton, $1,664; Sandy, $1,622; South Jordan, $1,593; West Jordan, $1,581; Bountiful, $1,540; St. George, $1,448; and Logan, $1,421.
Property tax payments are due Nov. 30.
Big differences in property tax
• Utah’s highest: northwest corner of West Valley City in the Magna Water District: $2,135 on a $200,000 home.
• State’s lowest: unincorporated Wayne County, $634 on a same-valued home.
• Difference: $1,501.
• Median property tax bill in state: $1,509 on a $200,000 home.
Lee Davidson. Salt Lake Tribune

Tuesday, October 30, 2012

Mail in ballots degrade the accuracy and speed of election results according to a new Cal Tech-MIT study. Washington Post Editorial. October 29, 2012.

A new Cal Tech-MIT study criticizes the use of no-excuse absentee balloting and the all-mail elections in effect in Washington state and Oregon. Aside from the issue of early votes rendering moot late-breaking events, the study warns mail ballots degrade the accuracy and speed of election results.
In 2008, 35.5 million absentee ballots were requested but only 27.9 million were counted, according to the survey. Among them, 3.9 million were requested by voters but never received, 2.9 million were sent out but never returned, and 800,000 were returned but rejected by election officials due to mistakes. “This suggests that 7.6 million absentee ballots — 21 percent of all requests — leaked out of the system before counting even began,” said the report. Such a large percentage of uncounted ballots leads to a jolting conclusion: An early vote could be a wasted vote.
The tedious process of handling absentee ballots can also slow down the count. The battleground state of Ohio has sent out 1.4 million absentee ballots but only 619,000 have been returned so far, according to the Cincinnati Enquirer. Citizens not returning their mail-in ballots are allowed to vote on Election Day using provisional ballots, which, by state law, are not counted until Nov. 17. If the race between Mr. Obama and Mr. Romney hinges on the outcome in Ohio, the nation may be left on tenterhooks for weeks before a winner is declared.

Balloting that obviates the impact of late news or trades accuracy and speed for convenience detracts from the fundamental right to representative government. When it comes to the democratic process, Americans shouldn’t mail it in.

Does early voting sacrifice thorough decision-making and cause a disservice to the democratic process? Washington Times Editorial. October 29, 2012.

Being informed before casting a ballot is a civic duty. Although voters may scorn the kind of gutter politics that encourages an “October surprise” in a presidential election, crucial, late-breaking events often bring legitimate issues to the fore. Early voting adds convenience, but by sacrificing thorough decision-making it may end up disserving the democratic process.
The current contest between President Obama and GOP rival Mitt Romney makes the case. Americans who took advantage of early voting prior to last week hadn’t heard that the White House knew nearly in real time that the U.S. Consulate in Benghazi, Libya was under attack on Sept. 11. These voters were unaware that U.S. forces were standing by to assist and that four besieged Americans likely died because no one in the administration would give the order to rescue them. This blunder probably wouldn’t convince many of Mr. Obama’s diehard backers to reconsider, but for other early voters, a change of heart would have come too late: Their votes were cast.
About 30 percent of the electorate voted early in 2008, according to George Mason University's United States Election Project. Whether due to military service, travel or simply the desire to avoid long lines on Election Day, the proportion could reach 40 percent this year. Thirty-two states and the District of Columbia allow some form of early voting.

Monday, October 29, 2012

Utah created the Permanent State Trust Fund to receive revenue from the Tobacco Master Settlement Agreement.

"Utah created the Permanent State Trust Fund to receive revenue from the Tobacco Master Settlement Agreement. Since 2008 it has also received limited severance tax revenue.
Mining, oil and gas companies pay severance taxes (when they "sever" oil, gas and minerals from the earth) in addition to property, income and sales taxes that other Utah businesses and individuals pay. By definition, severance taxes can’t last forever. There is only so much oil, gas, copper, molybdenum, etc., in the ground. When those resources are gone, severance taxes will also be gone.
Before 2008, the Legislature spent all severance taxes for ongoing programs. Fortunately, an overwhelming majority of Utah voters amended Utah’s Constitution in 2008, thereby allowing, but not requiring, the Legislature to save severance tax revenues in Utah’s Permanent Trust Fund. However, less than two years later the Legislature stopped investing severance tax revenue in the Permanent Trust Fund and instead went back to spending it all each year."
Rep. Jim Nielson, R-Bountiful, represents District 19 in the Utah House of Representatives; Sen. Lyle Hillyard, R-Logan, represents District 25 in the Utah Senate; and Sen. Ben McAdams, D-Salt Lake City, represents District 2 in the Senate.

Sunday, October 28, 2012

Constitutional Amendment A Joint Resolution on Severance Tax

Note:  This is the information in the Utah Voter Guide regarding the Constitutional
Amendment a Joint resolution on the 2012 ballot.

SENATE: 26-1-2
HOUSE: 54-17-4

Shall the Utah Constitution be amended to require a portion of the revenue from all of
the state's severance taxes, excluding severance tax revenue used for Indian tribes,
to be deposited into the permanent state trust fund beginning July 1, 2016?
Constitutional Amendment A requires a portion of the state's severance tax revenue to be deposited into an existing
permanent state trust fund beginning July 1, 2016. The severance tax revenue subject to deposit into the trust fund does
not include severance tax revenue that state law designates for use by Indian tribes.
Permanent state trust fund
There currently exists a permanent state trust fund, which was established under a 2001 amendment to the Utah
Constitution. As provided in the Utah Constitution, money deposited into the trust fund may not be removed from
the fund unless approved by the governor and three-fourths of the Senate and House of Representatives. Money
in the trust fund is required to be invested for the benefit of the people of the state. Income earned on money in
the fund is required to be deposited into the state's General Fund to be used for general state purposes, as
determined by the Legislature.
Severance tax
Under current Utah law, the state imposes and collects a tax, called a severance tax, on those who remove oil,
gas, or minerals from land within the state. The tax is based on the amount of oil, gas, or minerals removed.
Some of the severance tax revenue generated from oil and gas removed from Indian lands is set aside to be used
for the benefit of Indian tribes in the state. The remainder of severance tax revenue is placed in the state's
General Fund to be used for general state purposes.
The total amount of severance tax revenue over the past ten years, not including the revenue used for Indian
tribes, averages about $70 million annually. State law currently requires annual severance tax revenue
exceeding a threshold of about $105 million to be deposited into the permanent state trust fund. In 2009, about
$23 million of severance tax revenue was deposited into the trust fund under that requirement and a lower
threshold then in effect.
Currently the use of severance tax revenue is governed by statute enacted by the Legislature. The Utah
Constitution does not mention severance taxes or specify how revenue from severance taxes is to be used.
Constitutional Amendment A requires a portion of the state's annual severance tax revenue, excluding severance tax
revenue used for Indian tribes, to be deposited into the permanent state trust fund beginning July 1, 2016. The portion to
be deposited into the trust fund is 25% of the first $50 million of annual severance tax revenue, 50% of the next $50
million, and 75% of all severance tax revenue over $100 million. By requiring that portion of severance tax revenue to be T TITLE
deposited into the permanent state trust fund rather than into the state's General Fund, the Amendment restricts the ability
of the Legislature to determine how that portion of the state's annual severance tax revenue is to be used.
If approved by voters, Constitutional Amendment A becomes effective January 1, 2013.

Under Constitutional Amendment A, some severance tax revenue that would have been deposited into the state's
General Fund will be deposited instead into the permanent state trust fund. Total General Fund revenue is therefore
reduced in any fiscal year by the amount of severance tax revenue deposited into the permanent state trust fund during
that year. Once that revenue is in the permanent state trust fund, it is invested to generate income. Any income
generated is required to be deposited into the state's General Fund. The income deposited into the General Fund,
therefore, acts to offset any reduction to the General Fund that results from severance tax revenue being deposited into
the permanent state trust fund.
Based on current estimates of future annual severance tax revenue and assuming that the amount remains constant,
approximately $36 million of severance tax revenue will be deposited annually into the permanent state trust fund
beginning July 1, 2016. That $36 million annual deposit into the permanent state trust fund will result in an annual
decrease of that amount to the state's General Fund. The amount of that annual decrease will diminish over time as
income on trust fund money increases. By 2044, the decrease in General Fund revenue resulting from annual severance
tax revenue deposits into the permanent state trust fund will be eliminated, because income on trust fund money being
deposited into the General Fund will equal or exceed the amount of severance tax revenue being deposited into the
permanent state trust. These calculations are based on an assumed 3.5% annual rate of return on money in the
permanent state trust fund.
The bipartisan supporters of Constitutional Amendment A believe Utah’s natural resources belong to all generations, not
just ours. A vote FOR Constitutional Amendment A is a vote FOR investing a portion of our natural-resource revenues for
future generations.
Utah collects severance taxes on oil, gas, and minerals extracted from our lands. States like Wyoming and New Mexico
do the same. For decades they’ve invested a portion of those revenues. Today they each have funds worth billions. By
comparison, Utah’s trust fund amounts to $120 million—barely more than a year’s worth of severance taxes.
Today, rather than add to our investment fund, we spend what we collect each year. This is unwise on two counts:
1. Revenues rise and fall sharply as commodity prices and extraction activities fluctuate. Spending all of our
severance tax receipts when revenues are up leads to program cutbacks when revenues decline.
2. Severance taxes come from non-renewable resources. One day, non-renewable resources and associated
revenues will shrink and ultimately disappear. At that point, if we haven’t invested any severance tax revenues for
them, future generations will do without.
When 66% of voters approved a similar amendment in 2008, our goal in doing so was to increase our investments for
future generations. Unfortunately, that is not happening. The 2008 amendment allowed Utah to invest severance tax
revenues into the Permanent State Trust Fund. An associated statute required that combined severance taxes in excess
of $98.6 million annually be invested in the trust fund. Once invested, fund earnings could be used, but principal could be
spent only in case of emergency, with concurrence of three-fourths of both House and Senate, plus the Governor.
Undoing the intent of the voters in 2008, the 2011 Legislature increased the total allocated for annual spending to $104.6
million. As a result, we spend everything and invest nothing. It only took a simple majority to enact this 2011 formula
change. The same could readily happen again without Constitutional Amendment A.
In keeping with the will of the voters, Constitutional Amendment A does the following:
Invests a set portion of all severance taxes directly into the trust fund. Earnings will benefit each future generation
Establishes a base investment formula that can’t be changed by a simple majority of the Legislature.
Delays the effective date of the investment formula until FY 2017 to allow phased implementation.
Continues the trust fund’s role as a very secure reserve, backing up our rainy day funds, which can be tapped
only in case of emergency with supermajority approval.
One day Utah’s severance taxes will be gone. We owe it to the generation that will experience this decrease in revenue to
start planning today. Join us in voting for Constitutional Amendment A to save some of our severance tax dollars. If we
truly are the best-managed state in the union, it is time to invest in our children’s future.
Representative Jim Nielson
Senator Lyle Hillyard
Senate Sponsor

Utah typically sets aside part of the revenue generated from natural resource extraction for future use. The amount of
these funds, which are deposited into the Permanent Trust Fund, will grow substantially as oil and gas prices rise in
coming years.
Utah also has boosted its Rainy Day Funds by tens of millions of dollars every year that a budget surplus exists. The
success of Utah’s planning for the future was evident during the recession. The balance of the Rainy Day Funds never
dropped below $209 million –50% of its all-time record high. This provided a financial cushion to the state.
This recent experience illustrates that Utah already embraces a prudent approach to budgeting. This approach allows
lawmakers to balance pressing current needs with concern for the future, and to quickly make adjustments as conditions
Constitutional Amendment A would upset this balance, permanently reducing Utah's ability to address economic
downturns. Should this measure be approved, the next time the state faces an unforeseen downturn it could be forced to
either raise taxes or make deeper cuts in critical services affecting neighborhood schools, universities, state parks, courts,
and the Utah Highway Patrol.
The current constitutional language – approved by voters in 2008 – allows public officials to assess existing conditions,
listen to the views of their constituents, and make careful decisions about the appropriate balance between Utah’s current
and future needs.
Vote NO on Constitutional Amendment A. Utah will benefit from maintaining flexibility as it faces the economic
challenges of the future.
Representative David Litvack
Minority Leader, Utah House of Representatives
Be it resolved by the Legislature of the state of Utah, two-thirds of all members elected to each of the two houses voting in
favor thereof:
Section 1. It is proposed to amend Utah Constitution Article XIII, Section 5, to read:
Article XIII, Section 5. [Use and amount of taxes and expenditures.]
(1) The Legislature shall provide by statute for an annual tax sufficient, with other revenues, to defray the estimated
ordinary expenses of the State for each fiscal year.
(2) (a) For any fiscal year, the Legislature may not make an appropriation or authorize an expenditure if the State's
expenditure exceeds the total tax provided for by statute and applicable to the particular appropriation or expenditure.
Utah Voter Guide Page 31