Property Tax Calculation

Property Taxes

Utah law states that property tax revenues provided to a taxing entity (in this case West Valley City) are to remain level each year plus any new growth. This means that property tax revenues are flat from year to year regardless of changes in market value. There is no built-in adjustment for inflation or other market changes. Though the values of property may increase or decrease, the rate is adjusted to ensure that taxpayers will still pay the same amount of tax. This creates stability in property tax collections and helps avoid the ups and downs associated with market fluctuations, but it also means that no adjustments are made to allow for inflation or to cover the increasing costs of providing city services. The only way for cities to increase property tax revenue is to bring in new growth or raise revenues through increasing taxes. New growth is new fixtures or construction, not a change in market value.

Property Tax Relief Information

Information regarding property tax relief can be found here.

Judgment Levy

Each year some large property taxpayers (businesses) appeal their property tax assessments contesting the county’s valuation of their property to request a refund of taxes overpaid. A business’s appeal may take years to resolve and can include multiple years of contested overassessments. If it is determined that they have been overpaying their taxes because of an over-assessment, a judgment or rebate is awarded that can include multiple years of overpayments and interest. The amount of this award is called the “Judgment Levy”.

The total amount of the award is deducted from the revenues of the taxing entity in the year it is awarded creating a potentially large imbalance in revenues. This can throw off budget projections and create shortfalls in operational revenue. State Law allows cities to repair this imbalance in revenues by adopting a one-time adjustment to the property tax rate by holding a Truth in Taxation hearing. When enacted, the adoption of the judgment levy rebalances the loss of revenue from one or more businesses who received a refund to all other taxpayers. Adopting the judgment levy helps avoid some of the potentially damaging revenue shortfalls due to these unforeseen refunds.. It is important to note that the adjustment in property tax rates for a judgment is only in effect for one year and drops off the following year.

Adopting the eligible judgment levy rebalances the cost of the refund from businesses who have been overpaying to the rest of the tax payers who may have been underpaying by the same amount. This rebalancing of the tax burden equitably redistributes the amounts paid from those who have overpaid to those who have benefited by their overpayment.

Truth-In-Taxation

The City may decide to hold a Truth-In-Taxation hearing to adjust for the judgment levy or to consider increasing property tax revenues. Annually considering adopting the Judgment Levy helps stabilize revenues and eliminates the unforeseen negative shortfalls due to judgment awarded refunds. There are significant advantages of electing to hold a Truth-In-Taxation hearing each year. The public has increased opportunities to become informed about the property tax process and, the continuing economic impacts of inflation and the community’s changing needs are considered.