Property taxes, part 4: is Truth-in-Taxation harmful to local governments?
Opponents of Truth-in-Taxation (TNT) argue that TNT harms local governments because the calculation of the certified tax rate does not include inflationary adjustments. To offset inflationary losses, local government must go through Truth-in-Taxation periodically.
As we explained in part 3, property tax revenue growth since TNT's enactment has been nearly identical with inflation and population growth. When property tax reductions unrelated to TNT are accounted for -- two legislative reductions in the statewide basic levy for education and a reduction in county property taxes in exchange for county authority to impose a 0.25% sales tax -- property tax revenues have increased slightly faster than inflation and population growth.
Property tax revenues would be even higher (or property tax rates for everyone would be lower while local governments would be getting the same amount of revenue they are currently receiving) if cities would stop using RDAs to subsidize locally-driven retail, recreation, and entertainment. Subsidizing economic activity that would occur on its own somewhere in Utah without a subsidy is poor fiscal policy. Hopefully, recent RDA reform will change this.
