The county assessor is charged with the responsibility of assessing fair market value for residential, commercial, and agricultural properties. This is done in an easy- to-understand process where the assessor considers recent comparable sales of similar properties to determine a fair market value. Properties that are assessed a value by the county assessor are called locally assessed properties.
For some properties, however, determining fair market value is considerably more challenging. The property valuation for utilities, telecommunication companies, and airliners are calculated at the State Tax Commission and are called centrally assessed properties. These properties don’t change hands easily or often and so finding the fair market value is much more challenging.
To calculate the values of centrally assessed property, the tax commission uses a combination of three different approaches towards determining value:
- The cost approach
- The income approach
- The stock and debt approach
The tax commission weighs each of the three approaches based on the industry in determining a property value associated with each property owner.
County government still plays a role in setting centrally assessed property values. After the tax commission sets property values for centrally assessed properties, property owners and counties are permitted to appeal the tax commission’s decision. Property owners are typically interested in seeing their value reduced (resulting in lower taxes).
Reduced taxes to a taxpayer doesn’t result in reduced revenues to taxing entities (including counties). Under Utah’s truth in taxation property tax system, property tax revenues to taxing entities are kept constant from year to year. This means that as property values appreciate, taxing rates automatically go down. Additionally, changes in individual property values result in a tax shift among other property owners. In the case of a centrally assessed property owner successfully winning a property value appeal, the result is a tax shift to locally assessed properties.
The counties act as a check and balance to ensure that centrally assessed taxpayers don’t receive too many concessions at the cost of locally assessed taxpayers.