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Thursday, September 25, 2008

Guest Post from State Rep. Gage Froerer on Property Tax Reform

As you know, I have been actively working as a member of the Revenue and Taxation Committee to come up with solutions to our property tax problem in the Valley and the State of Utah. The time is now for definite action if we want to make any changes in the existing tax system in the next legislative session. I would ask each of you to review the issue as presented below and get back to me before mid October with your ideas and suggestions.

The Problem As I View It!
Predictability is the foundation of a fair and soundly administered tax system. Most importantly, a predictable tax system ensures tax certainty for taxpayers. "Tax certainty" means that taxpayers can, year after year, consistently expect a predictable tax bill.

No one likes an unpleasant surprise when it comes to paying taxes. Taxpayers want to be certain as to what their tax liability will be and when the taxes are due. Tax certainty improves both taxpayer compliance and support for the tax system. Taxpayers lose confidence in the tax system, and view it as arbitrary and unfair, if it cannot provide a predictable and stable tax obligation.

Tax certainty is especially critical under the property tax. The property tax is the only tax where the government determines the tax to be paid and then sends a bill to collect the tax that is due -- months after the assessment. Unlike sales or income taxes where tax choices are largely in the hands of the taxpayer, a taxpayer's property tax liability is determined and controlled, in large measure, by the government.

Utah's current property tax system, based on fair market value (FMV), does not ensure tax certainty for taxpayers. Difficulties in accurately determining fair market value on a mass basis, volatile housing prices, shifting tax burdens, and tax rate increases, have led to dramatic increases in property taxes for many Utah taxpayers.

Improving Taxpayer Certainty for Property Taxpayers
Improving taxpayer certainty will help restore taxpayer confidence in the property tax system. Under my proposal, property taxpayers can be certain that their annual property tax liability will nearly always be within certain bounds.

Highlights of the plan include (click here to view):


Issues for Discussion and Comment

1. Should this plan apply to residential property only? (Owner occupied and/or rental?) Or all locally assessed property? (No change is contemplated for personal property or centrally-assessed property.)

2. Should this plan require a dynasty provision? How are property transfers between spouses treated? Between generations?

3. Should this plan allow a transferring of the "fixed basis" from one house to another? Within counties? Between
counties? How many times? Age limit?

4. How to handle drop-in housing prices? Drop below either base year level or acquisition value?

5. Is the "growth factor" set statewide or will it vary by region?

6. How to handle new construction on raw land when no sale occurs. How is the tax basis determined? Cost basis?

I look forward to your comments and suggestions and I can ensure you that by working together, we can make a difference in our County and State.

Comments should be sent to Gage Froerer prior to October 15th.

Gage Froerer
District 8 State House of Representatives.
801-391-4233
gfroerer@utah.gov

6 comments:

No more games ... said...

Representative Froerer, your "Plan" will not succeed, just as none of your proposed or sponsored legislation has succeeded.

The reason is you do not do your homework. Nor do you seem capable of preparing adaquately. The only time you came close to actually passing any legislation is when the Utah Realtor Association's lobby/lawyers wrote and delivered to you the legislation favorable to them, and incidentally your own business interests, and then flexed their big money muscle with your bought and paid for colleagues (60%) in the Utah legislature.

Case in point was the House Bill you co-sponsored which would have allowed developers to go around County and Municipal Planning Commissions, straight to Realtor Association bought and paid for County Commissioners and Town Council members and Mayors. Chris Kyler, CEO/CFO of the Utah Realtor Association, and your buddy, actually bragged about this in an interview in 'Governing Magazine' in 2006.

Another case in point, HB 466, the "Developer's Dream Bill" (which has resulted in Powderville mess, etc.), was blatantly unconstitutional. Yet you said nothing, along with your realtor/developer lapdog colleagues in the legislature. Did you flunk Civics and US Government in HS?

Why have you not sponsored legislation which makes it illegal, for instance, for the Utah League of Counties or the League of Utah Cities and Towns to use our taxpayer money to actually lobby against the interests of the people who pay these taxes? Never thought of it eh? Who did the lobby work for HB 466? Who paid her? What with? Why does Roger Tew, as a lobbyst for the League of Cities and Towns, sit on the Tax and Revenue Commission? So many direct and obvious Conflicts of Interests it could only be that you have no clue about what constitutes a COI? You are one!

Another case in point. The Utah Realtor Association came out supporting "Deferred Taxation" (re Brian Kohler, Chief Lobbyst in charge of Governmental Affairs for the Utah Realtor Association and President of the Salt Lake Realtor Association, in his Interim Revenue and Taxation Committee testimoney, 22 Sept. 2007). You, Representative Froerer, sponsored this legislation which they wrote. And it puts the State in the role of mortgage broker and collection agency for Draconian back taxes, annual interest charges and penalty fees. These "deferred taxes" you actually are proposing still today, will be levied on poor or near poor senior citizens on fixed incomes. It will place back taxes, penalties, and a minimum of 6% annual interest burden on any heirs to the estate, thus forcing them to have to sell in order to pay back taxes. This, of course, is precisely why the Realtor's Association supports it, since it generates more sales and Realtor commissions. You, Representative Froerer, have sponsored this legislation in both the 2006 and 2007 legislative sessions. Go ahead and deny the official record.

Why have you not sponsored legislative Ethics reforms? Do you not read? Do you not understand that four of every five citizens support legislative ethics reform?


Why have you not signed the Ethics Pledge being somewhat theatric but sincerely put out by the Teachers for Responsible Legislation? Afraid you might be preceived as a maverick or non GOP Team Player? Gutless? Why "Representative" Froerer...why when at least eighty percent of your constituents support ethics and campaign finance donations reforms?

Why have you NOT sponsored legislation which would stop this insane yet legalized and corrupt bribery scheme? Why have you not supported doing away with the free gifts to legislators, and worse...unfettered,unlimited and uncontrolled "Campaign Finance Donations"? Donations, which are nothing more than bribes for special interest legislation. Bribes spread around for positions/offices within the House and Senate? Positions, which like Senate Pres. Valentine and House Speaker Curtis or Senate Majority Leader Bramble invest in, by using illicit campaign donations from special interests to spread among you ethically challenged legislators, and reap literally hundreds of thousands of unethcial and un reported income. Special interest bribery money which comes with expectations. They do not spend money on you because of your sparkling personalities or good looks.

Why have you done nothing to stop the RINOs (Republicans in name only) from making our beloved State the laughing stock of America?

There is more, much more...but you Sir, do NOT deserve another term. You have done nothing but grandstand on property tax issues suffered by so many in Huntsville and the Ogden Valley, very late last session (with only two weeks left in the session). And you are trying to grandstand again with this incredibly lame, poorly thought out and naive "Plan". This, after you voted to pay yourselves (as "selected" members of the Interim Revenue and Taxation Subcommittee) throughout the summer, to meet eight (8) additional sessions to actually learn a little about the Utah property tax system. Where is the Report of the Research? Where are the results? Are you seriously trying to suggest this outrageous confusing babble you wrote is the result of the thirty thousand dollars we tax payers spent on your per diem, travel, and lodging and pay over the eight sessions. Where you asleep or was it over your head?

Why were none of the citizens you now solicit to "help you" on a study team effort professionally led and conducted over the Summer?

Little wonder why District 8 "Representation" has been all but non existant. Representation by the ill equipped and lead by self serving buffoons.

Many have worked for many many months to try to "Make a change" as you suggest. But the deck is stacked by corruption, graft and cronyism within the Utah legislature. And this is why you and many others will be turned out of office unless the people are as stupid as you seem to think we (they) are.

To get conservative values these days in Utah, it seems votes must be cast for Democrats. Your effectiveness and abilities have been measured and been found wanting, Representative Froerer. But take heart. You are not alone. The people know it and will show it in November God willing...

Eden resident said...

Thanks "No More Games" - that was truly delicious!!
I agree completely, out with the old this election.
As Mark Twain said, "We have the best government money can buy."

The Viking said...

It would be more constructive to make suggestions on the property taxes instead of the same old ranting about Froerer or the State Legislature. There will be plenty of time for everyone's politics in the next few months.

The Taxation committee is waiting for input from citizens about property tax reform!

No more games said...

For Viking,

"Many have worked for many many months to try to "Make a change" as you suggest. But the deck is stacked by corruption, graft and cronyism within the Utah legislature."

The entire Utah Coalition for Tax Fairness has been involved since last August. Jim Bray, for example travels all the way from basically St. George in order to meet with us fellow members of the coalition and work with these numb skulls in the legislature.

But these citizen inputs (all our inputs) and the private thousands of hours and dollars (all our own dollars and time) they have put into this have been a waste of time and money. Senator Neiderhauser, Co-chair of the Interim Revenue and Taxation Subcommittee, (and a CPA and Realtor/Developer) as well as "Representative" Froerer, Harper, Stephenson, Bramble, Valentine, and the others simply do not understand nor do they listen nor care.

And his colleagues know if you want a bill to not be passed have Froerer sponsor it.

They know from whence their bread is buttered. And your santimonious comment, "Viking", though well intended I suspect, is misplaced in this instance.

Put your money and time where your mouth is...

Whistler said...

I guess that settles it, don't anyone try to contribute any ideas since it is all a big waste of time according to big mouth (no more games).

Just throw in the towel because the self appointed king says so! Don't let this person do your thinking for you. If you have something to contribute regarding property taxes, do it.

I think the Viking has a great point about what is
important right now.

No more games said...

Thanks Viking and Whistler...for pointing out just how downright honery and unidealistic I am.

Truth is "Froerer's Plan" was written, briefed and delivered to Senator Wayne Niederhauser, Curt Bramble and others by "big mouth" (me) back in January timeframe. Truth is, coalition members, seven of us, briefed Niederhauser in his corporate office. And we have met with Senator Stephenson in his office, as well as many other legislators, over several months. The only differences between what we prepared and briefed are; the questions or points for discussion being raised by Froerer, are clearly delineated with well researched and documented ANSWERS and solutions. You see, I have already worked all the issues and made recommendations. Hell, I even wrote the draft legislation months ago! And others in the coalition have helped shape it also. And, yes, others could have and probably should have been also involved except for involvement in other important issues --- like the Powder Mountain mess House Bill 466 created.

A completed draft bill was even submitted to Senator Niederhauser and Representative Dougall, co chairs of the Interim Revenue and Taxation Subcommittee, back in the December/January time frame. They asked me and us, the State wide coalition, for this plan and our recommendations many months ago.

So you see, Froerer's Plan is not his own, but the result of the Utah Coalition for Tax Fairness. And the points of contention or the fuzzy parts he seems unsure of have already been settled (at least by active coalition members from across Utah, using 20 years of Oregon and 30 years of California experience and their resultant corrective legislation. This means...the mistakes made during hasty precidence setting legislation back in the late 70's (California Prop. 13), and mid 90's Oregon, have been resolved with equity and fairness reached and suggested.

If Froerer understood the concept of "attribution", he would have shown integrity and given credit where credit was due (to the coalition...not me) and in the process given his "Plan" at least a modicum of credibility. But alas...ethically challenged or just plan unqualified...but I will save the obvious rant and spare you.

Why "reinvent the wheel" because Froerer and others do not understand? Or maybe they do???? And just want to play more games? Delay tactics...more last minute grand standing?

Let me explain how this will work. You (Viking and Whisler) can always say, "See I told you so. We made a big difference by helping our local representative." Remember, I already have, BUT:

This is how it will play out...

a) Constituents are upset in Ogden Valley.

b) Constituents are upset in Washington Co., and pockets of Salt Lake and Utah Counties. And the frugal Bountiful and Davis Co. people are, bless their hearts, lighting torches and marching on the Capital.

c) Hue and cry goes out...Prop 13 needed now!! Enough is enough! Property taxes are unfair and inequitable!

d) Constituents blog and protest. They write letters to the editiors and organize into a coalitions. Promise scortched earth come Nov. elections.

e) Politicians are concerned about the possible numbers of voters who are outraged over property taxation. Fear reprisals at the polls over both property taxes and school vouchers.

d) GOP leadership decides on political strategy of appeasement directed toward dissonants who are outraged and over assessed constituents. Unknown numbers of voters within coalitions make them nervous.

e) Most effected district representatives feign legislation designed to appease and calm the waters of discontent. (example; Froerer's Plan, which is not his plan, nor a plan at all in reality)

f) At the last possible moment representatives suddenly claim to be for what the "angry mob of farmers with pitch forks" say they want. They take credit for what others have written and researched for months, even years, calling it "their plan to make it better".

g) Of course the "Plan" is a strawman, a red Herring. The "author" representative knows full well his/her proposed legislation will never pass. In fact will not even get out of committee. (sounding familiar Keith Smith?)

h) Result...constituents are pleased with the mere effort and nothing gets done. Representative gets a pat on the head and a vote in Nov.

Case in point. Today's SL Tribune has a short article written by McKitrick. In it, she reports Froerer as having said he tried to sponsor a similar AV property tax bill last session, but ran into an unexpected obstacle. Turns out that the Utah State Constitution must be changed in order for purchase price or "acquisition value" to be used in lieu of the current specified "fair market valuation" method of assessment.

Truth is, every person involved with property taxes has known this since last August, or longer!

So now. Where is Froerer's "Plan" to get 2/3s of the entire State legislature to support an amendment to the State Constitution? And where is his "Plan" to get a majority of Utah voters to ratify the change to the State Consititution? When? In 2009 or 2010? These majorities are REQUIRED in order to amend the Constitution and he knows it. No petition drives or such will do under Utah law. California and other states sure.

Truth is, the last time an AV approach to property assessment was tried back in about 1983, the Utah Education Association knocked down the effort in the general election, because they felt threatened by a possible loss of tax revenue.

Truth is, the last time a Senator tried his own version of a acquisition value type property assessment for property taxation, the Utah Realtor Association killed it off before it could even make it out of committee. (Re Senator Stephenson).

Truth is...this is the way things are being run in the Utah legislature. And the way things will continue to be run, as they have for the past 10 years or more, until and unless Froerer, Neiderhauser, Bramble, Curtis, Valentine, and just about exactly 60% of the current legislature is asked politely by voters to disengage from Utah politics permanently in November elections.

This is why it is so important to consider the realities of our current predicament. This is why it is so important to go for a solution to the root cause of the problems we have in the Utah legislature. The Utah legislature is not some pollyanna populated masterful organ and voice of the people John and Larry or Viking and Whistler seem to think it is. The ugly reality is it is far less than it must become before what is truly right so the people of this State can realize true democracy and liberty.

Now, I sincerely hope you "get it" this time Viking and Whistler and anyone else out there. Don't believe me. Good on ya! Please attend legislative sessions. Meet the legislators and spend some time in their offices and at the cafeteria with them. Listen to the Committee meetings, and the sessions. Dig and dig deep and learn about who these people really are, what they do for their real jobs and how they operate. See for yourself how the lobbyists operate, who they are and what the pecking order is. Research every newspaper in the State every morning and read about who is on the take and why...what the ethics situations are and why. Who the good guys/gals are and why...and all the others and how they got there.

I did frankly, and it made me sick to my stomach. But hey, that's just me. You have every right to trust and believe every word ALL of these people say. And you have every right to think you are making a big contribution by "assisting them" in their genuine and sincere efforts on all our behalfs John and Larry. I certainly began thinking exactly that way. Only reality and facts opened my eyes.

Oh, and by the way. One thing I forgot to mention. Actually there is much more. Froerer's "Plan" does not address the most seriously abused tax law in Utah either. He knows this because he is also a part of that problem too. The Farmland Act or "Greenbelt". Did you know that developers use it to stash investment properties away long term and pay only between 8 cents and 15 cents an acre? Did you know that fairly recently the Utah legislators passed an amendment to the Farmland or Agricultural or "Green Belt law" (all the same thing) making "pleasure horses" an agricultural endeavor or "crop"? Do you know that according to the Utah State Tax Commission (Denny Lydle) there is only ONE person assigned to audit and check for green belt fraud for the entire State of Utah? And did you know it is "policy" for the Tax Commission auditor to have to send out a letter informing the land owner of the date and time of the inspection? Do you know any developers who have their land cut and baled just for show? Have you eaten any horse meat lately? Hmmm Froerer has "Greenbelt property and horses" Hmmm. What crops?

What about it? If land owners had to pay more than 8 or 15 cents an acre, how much do you think the assessor would be hyping up your house or property assessment? It is called a tax burden shift from large tact land owners/developers onto residential property owners.

And before anyone goes nuts and lectures me about the legitimate original intent of the "Green Belt" laws for honest to goodness farmers and ranchers, I am NOT talking about you or them. Honest farm/ranch endeavors do deserve an honest and well intended tax break. I am talking about speculators and land investors and developers. Those who lie cheat steal and maneuver using well intended laws as loop holes. I notice Scott Anderson, President of Zion's Bank, for example, just put five horses on his seven mostly adjoining subdivision lots in Huntsville. Hmmmm, see what I mean? Guess Senate President Valentine, who is paid handsomely to sit on the Zion's Bank Board, must have put the horsefly in his ear....

So what's the bee up your butt now? Go ahead denegrate and trash the messenger because you don't like the message, or help for real and actually DO SOMETHING for a change. Consider not voting for any incumbent, for example. Just a suggestion. Take it or leave it.

"Better to go naked in truth than clothed in vanity and falsehoods."