Audit and staff briefings show property-tax burden shifting to homeowners; committee opens bill files for exemption change

SALT LAKE CITY — Auditors and legislative staff told the Revenue and Taxation Interim Committee on Oct. 1, 2025, that Utah has seen a notable shift in its property-tax base: primary residential property now accounts for a larger share of statewide taxable value than it did a decade ago, pushing more of the tax burden onto homeowners.

The audit of local taxing authorities presented to the committee by Leah Blevins, manager with the Office of the Legislative Auditor General, found most taxing entities collect within 10% of their budgeted revenue year to year and that the truth-in-taxation process generally holds overall revenues steady. “So essentially what we found is that entities are not collecting significantly more on a consistent basis than they've budgeted for,” Blevins said. But the audit and subsequent staff analyses identified other causes for rising homeowner bills.

Why it matters: committee staff and the auditors told members that fast residential market appreciation, a 2018 freeze in part of the basic rate, and county-level differences in how “new growth” and exemptions are applied have combined to increase the share of taxes falling on primary residential owners in many counties. That shift matters because local governments’ truth-in-taxation rules hold an entity’s total revenue constant; when residential value grows faster than other categories, the same revenue target produces a greater share of liability for homeowners.

What the auditors and staff presented

- Audit findings: The audit reviewed statewide collections and a six-county sample. Blevins said the auditors highlighted instances where entities collected more than 110% of budgeted amounts and traced many such cases to underestimates of personal property receipts in budget planning, not to a systemic bypass of truth-in-taxation. The auditors recommended clearer statutory guidance on virtual participation in truth-in-taxation hearings and suggested clarifying how counties should calculate new growth.

- State staff analysis: Chris Stitt, policy analyst for the legislative research office, and Jared Gibbs, a staff economist, presented complementary analyses. Gibbs showed that, statewide, the taxable value of primary residential property grew faster than commercial and centrally assessed categories over the last decade and now makes up a substantially larger share of the statewide base than it did in 2014. "If the residential base is growing faster than other bases ... that $9,000,000 [in revenue] is coming more and more from primary residential property than from other kinds of property in the tax base," Gibbs said.

- Modeling the residential exemption: Stitt and Gibbs presented staff modeling of a hypothetical increase in the residential exemption (the portion of a primary residence excluded from taxable value). Staff noted current statutory and constitutional limits: primary homeowners now receive a 45% residential exemption (they are taxed on roughly 55% of market value). Staff ran a 55% exemption scenario and showed that, while that change would reduce taxes on primary residences, it would shrink the residential share of the tax base and require certified rates to rise to keep taxing entities’ revenues constant — shifting more liability to commercial and nonprimary owners unless the state backfills the revenue.

- Sales-ratio and data limitations: Joshua (Josh) Nelson, director of property tax at the Utah State Tax Commission, explained the sales-ratio framework used to check assessor values and noted practical data gaps. Counties must meet statistical ratio bands (for many counties residential assessments must average 95–105% of sale price); to run a reliable study the tax commission typically wants at least 10 arm’s-length sales in a sample. Nelson said that for nonresidential property the number of usable sales is small: only 10 counties had enough recent commercial sales to run a commercial sales-ratio study this year. Overall, the commission estimated only about 2% of all taxable parcels statewide had a recent sale included in the commission’s dataset; for the commercial category the usable sample was a small fraction of parcels. The limited volume of verified commercial transaction data makes commercial valuation and statewide diagnosis more difficult.

Committee discussion and options

Committee members and presenters discussed several possible policy responses raised by the audit and staff work:

- Clarify truth-in-taxation administrative details. Auditors flagged timing issues around fiscal-year starts and differing county interpretations of virtual participation rules and “new growth.” They recommended the Legislature consider clarifying those items by statute.

- Improve commercial transaction data. Several assessors and Salt Lake County representatives described progress under voluntary memoranda of understanding (MOUs) with commercial brokers but said gaps remain. The committee discussed whether to pursue broader disclosure requirements or strengthen MOUs and reporting compliance. Brokers from Newmark Mountain West, Colliers and CBRE said they want fair, market-driven taxation and expressed willingness to improve processes but also warned that some transaction details (for example proprietary financing or negotiated confidentiality) complicate disclosure.

- Consider changes to the residential exemption and targeted relief. Staff briefed members on tradeoffs when increasing the residential exemption (constitutional limits, potential need for voter approval, and the possibility of offsetting impacts on commercial and nonprimary owners). Committee members suggested alternatives such as targeted property-tax relief programs, changes to business personal property exemptions, or state-level backfill using income-tax-based offsets.

Actions taken

- The committee adopted the minutes from its Sept. 16, 2025, meeting on a voice vote after Senator Fillmore moved to approve the minutes; the motion passed.

- Representative Eliason moved — and the committee unanimously approved — opening two bill files: (1) a proposed constitutional amendment to increase the residential exemption (illustrative proposal discussed at the meeting: a 5 percentage-point increase) and (2) a companion implementing statutory bill. Committee members emphasized the motion was to open files for further work only, not to adopt final policy. Representative Eliason described one illustrative approach discussed by committee members: raise the residential exemption, raise levies proportionally so taxing entities are held harmless, and offset some of the burden on commercial and nonprimary owners with a Utah income-tax deduction or other mechanism. The committee voted to open the files and asked staff to draft specifics for future meetings.

What was not decided

The committee did not adopt any final policy changes today. Staff were directed to prepare more detailed fiscal estimates, legal analysis (including the constitutional path for any residential-exemption change), and implementation options (phasing, income-tax offsets, eligibility rules). Members asked for additional work on the sales-ratio process, improved reporting from MOUs and assessors, and clearer statutory language for truth-in-taxation timing and virtual participation.

Where this goes next

Committee chairs and staff said they will return with draft bill language, fiscal notes and legal options for how a residential-exemption change could be structured — including the constitutional amendment pathway and any required voter action. The committee placed the matter on its work list and opened bill files to enable drafting and formal fiscal/legal analysis before any final committee vote.

Ending

Committee members thanked audit staff, the tax commission, county assessors and commercial brokers for testimony and asked staff to return with more detailed options. The committee adjourned after a final procedural vote.

Quotes (selected)

"So essentially what we found is that entities are not collecting significantly more on a consistent basis than they've budgeted for." — Leah Blevins, manager, Office of the Legislative Auditor General

"If the residential base is growing faster than other bases ... that $9,000,000 [in revenue] is coming more and more from primary residential property than from other kinds of property in the tax base." — Jared Gibbs, staff economist, Legislative Research

"There are some real limitations with having to reach out to all of the different commercial brokers to pull that data in." — Curtis Koch, Utah Association of Counties, director of operations, Multi-County Appraisal Trust

"If the residential exemption were increased ... the residential exemption would be a tax break for primary residential property. By contrast, the commercial and the centrally assessed properties would see an increase in their liability." — Jared Gibbs, staff economist

("All quotes are used as spoken during the Revenue and Taxation Interim Committee hearing; full transcripts or recording segments are on file with the committee.")