REQUEST LETTER
01-014
Response 5/3/01
Dear TAXPAYER REP:
After
consultation with TAXPAYER REP of the Property Tax Division, I am writing to
request an advisory opinion relating to the implementation by COUNTY this
fiscal year of Senate Bill 168. I have
attached a copy of the enrolled bill for your use in reviewing my request. Senate Bill 168 (page 2) requires COUNTY to
budget “detective investigative services” as part of its Municipal Services
operation and transfer expenditures related to that function from the
Countywide General Fund to the Municipal Services Fund. Pages 8 and 9 of the bill purport to
implement that transfer. Pages 8 and 9
require a reduction in COUNTY certified tax rate for fiscal years YEAR and YEAR
in a total amount of $$$$$$. While the
language of page 8 relating to “the certified tax rate” is general in nature,
it is my assumption that the Commission would interpret this to mean the aggregate
countywide certified tax rate. COUNTY
intends to show, as part of its budget re-opening, a direct reduction in the
Sheriff’s countywide budget for “detective investigative services” and a
concomitant increase in the Municipal Services budget for Sheriff’s “detective
investigative services” for the two-year period of $$$$$$. Those worksheets will be available to
establish that an appropriate adjustment has been made consistent with the
mandates set out on page 2 of the bill to provide “detective investigative
services ” solely from the Municipal Services Budget.
The
subject of the advisory opinion request relates to what appears to be an
oversight in the provisions set out on page 9 of the bill. Specifically, those provisions of Utah Code
Ann. §59-2-924(2)(l)(ii) allow for an increase in any or city or town’s certified
tax rate occurring as a result of the shift of taxing authority and
proportionate share of the $$$$$$ arising out of the County’s transfer of
“detective investigative services” the Municipal Services Fund budget. In what appears to me to be an oversight, no
such provision is made for an adjustment to the certified tax rate of the
County’s Municipal Services budgeting arising from that same shift. This apparent oversight gives rise to the
first question addressed to the Commission, i.e.:
(1) Will the Commission authorize an adjustment in the certified tax rate of the Municipal Services District of COUNTY consistent with that allowed for cities and towns and thus, allow usage of the modified truth in taxation advertisement provisions set out on page 9?
If the answer to the above is no, the following question needs to be resolved COUNTY advertised in December of YEAR for a proposed Municipal Services tax increase. It is unclear at this time whether the amount of tax increase advertised is sufficient to accommodate the unforeseen legislative mandate imposed by Senate Bill 168.
(2) If the proposed tax increase noticed in December, YEAR is insufficient to accommodate the mandated $$$$$ million shift to the Municipal Services Fund (and tax increases associated therewith), will the Commission authorize the County to levy a property tax increase sufficient to accommodate those increased expenditures contemplated in December of YEAR and the mandated $$$$$$ million tax increase in the Municipal Services Fund budget required under this bill?
Such approval would seem to be
consistent with the Commission’s prior opinions relating to unforeseen or
unforeseeable circumstances. It is
understood that should such approval be granted the full extent of the tax
increase would be subject to disclosure in both mailed and published notices.
Your
timely attention to this issue is appreciated.
Questions 2 is obviously of critical importance as the County attempts
to make a whole budget which was based not only upon assumptions as to countywide
versus municipal services, but also revenue projections which were derived from
those assumptions. The County
additionally believes that it should not be placed in a disproportionately
unfavorable position vis a vis cities and towns with respect to certified tax
rate increases authorized and identified in question one above.
If
I can provide any further comments or information with respect to this, please
contact me.
RESPONSE LETTER
DATE
RE: Advisory Opinion – Effect of Senate Bill 168 on Truth-in-Taxation
Dear TP REP,
We have received your request for an advisory opinion concerning Senate Bill 168
(SB 168) and its effect on the COUNTY Municipal-Type Services Fund (Municipal Fund). For the
fiscal year, SB 168
requires (County) to transfer at least $$$$$$ million in expenditures related
to “detective investigative services” from its Countywide General Fund (General
Fund) to its Municipal Fund. In
December, YEAR, the County adopted its YEAR1 budget for the Municipal Fund and,
as required under Utah Code Ann. §59-2-918, published advertisements notifying
the public that the County would be budgeting an increased amount of revenue,
or a tax increase. In further
conversations, you have informed us that the Municipal Fund’s YEAR budget, as advertised
in December, included an expenditure of $$$$$ million for detective
investigative services, an expenditure that the County “shifted” from its
General Fund.
The amount of the expenditure transfer for detective investigative services from the General Fund to the Municipal Fund that is required by SB 168 is greater than the County originally planned for in December. The County originally budgeted approximately $$$$$ million for detective investigative services in its Municipal Fund for 2001.[1] Because the Legislature has subsequently mandated the County to “shift” at least $$$$$$ million to the Municipal Fund for these services, $$$$$$ million more in expenditures, at a minimum, must be moved to the Municipal Fund. Accordingly, the tax increase advertised in December for this Fund may not satisfy both the expenditures budgeted at that time as well as the additional transfer mandated by SB 168. For these reasons, you present two arguments why the County should be allowed to levy a tax increase for its Municipal Fund that satisfies not only the original tax increase that was advertised, but also any additional expenditure transfer required by SB 168 that was not anticipated, even though the December advertisements did not reflect a tax increase that included both amounts.
SB 168 does not provide any adjustment to the Municipal Fund’s certified tax rate to reflect the expenditure transfer. However, the bill requires the revenue generated by the countywide Aggregate Fund certified tax rate (which includes the General Fund tax rate) to be decreased by the amount of the expenditure transfer. In addition, a city or town may increase its certified tax rate to generate an additional amount of revenue related to the transfer without necessarily having to meet the truth-in-taxation requirements of Sections 59-2-918 and-919. Because tax rate adjustments were provided for the County’s Aggregate Fund and for cities and towns, you believe that the Legislature would have provided an adjustment to the Municipal Fund’s certified tax rate had there not been an oversight. Unless the Municipal Fund is at least allowed an adjustment such as the one provided to cities and towns, you state that the Municipal Fund is “placed in a disproportionately unfavorable position.”
Although we understand your concerns, the Tax Commission does not have the authority to “add” legislation that may have been inadvertently omitted or amend a law so that it applies uniformly to all parties if the Legislature provides otherwise. As the enrolled version of SB 168 does not contain any provision for an adjustment to the Municipal Fund’s certified tax rate, we may not administer the law to allow for one. A plain reading of the statute requires such a decision. Even had we determined the law ambiguous on this issue and looked beyond the statute for legislative intent, it could be argued that the Legislature purposefully did not provide any rate adjustment or relief from truth-in-taxation for the Municipal Fund. The first version of SB 168 that was proposed to the Legislature specifically provided for a rate adjustment and relief from truth-in-taxation for the Municipal Fund because of the mandated expenditure transfer. Later versions, including the version that the Legislature enacted, deleted these provisions. For these reasons, we find no authority in SB 168 to allow the County, with respect to this argument, to adjust its Municipal Fund certified tax rate or be excused from the truth-in-taxation requirements of Sections 918 and 919.
SB 168 requires at least an additional $$$$$ million to be “shifted” to the Municipal Fund, above that which the County originally anticipated in its YEAR budget. As a result, you state that the tax increase originally budgeted for the Municipal Fund in December may not be sufficient. You ask the Tax Commission to rectify this situation by authorizing the County to increase its Municipal Fund tax rate sufficiently to accommodate both the expenditures contemplated in December and the additional expenditure transfer mandated by SB 168. You believe such a decision would be consistent with prior Tax Commission “opinions relating to unforeseen or unforeseeable circumstances.”
The Tax Commission has, on occasion, authorized an entity to adopt a tax increase greater than the one advertised, but only when there has been a change in law or fact after the budget hearing that the taxing entity could not have anticipated. The passage of SB 168 has created such a circumstance. We see no evidence that the County, when setting a budget and advertising its tax increase in December of YEAR, could have anticipated a change in the law that would necessitate an even larger budget and, thus, the need of an even larger tax increase. Accordingly, under these circumstances, we authorize the County to levy a YEAR tax increase for its Municipal Fund that will include the expenditures contemplated last December plus any additional expenditure transfer resulting from SB 168 that was not previously accounted for in the YEAR budget. Of course, this authorization is dependent upon the County properly completing all future notices and hearings related to the tax increase.
If we may answer any other questions, please contact us.
For the Commission,
Marc B. Johnson
Commissioner
MBJ/KC
01-014
[1] At that time, however, the County could not have known whether SB 168 would be introduced, what form it would take, whether it would be enacted, or what its ultimate impact would be.