Audit Finds Error Cost State $100 Million in Property Taxe Revenues

Jul 14, 2014

Utah has missed out on approximately $100 million in property tax revenue over the past eight years because of an error in how property taxes are calculated. Now as the state moves to fix the problem, taxpayers will likely be asked to pay more.

The office of the state auditor released a study on Monday that details how local governments across the state have been miscalculating new commercial and residential growth, thus driving down the certified tax rate. David Stringfellow is Chief Economist for the state auditor’s office.

“When that value of new growth is too low, the certified rate falls faster than it otherwise would,” Stringfellow says. “So property tax rates were a little bit lower than they otherwise should have been.”

Salt Lake City Mayor Ralph Becker prompted Utah State Auditor John Dougall to look into the state’s property tax system last May when he unveiled his 2014, 2015 budget proposal. Becker says he suspected tax revenues in the city weren’t keeping pace with the growth it had realized over past few years. Now that the audit confirms his suspicion, Becker says moving forward, taxpayers will be asked to pay what they should have been paying all along.

“The calculation error has accrued to the benefit of taxpayers, but it has also meant that the revenues coming into the city for us to provide services haven’t been what they should have been for us to provide the facilities and services that people need,” Becker says.

Salt Lake City, which has had some of the largest redevelopment projects over the past decade lost $2-$3 million dollars per year because of the error.

State Auditor John Dougall will present the findings to state lawmakers on Wednesday. Local government officials will then determine how to move forward.