Sponsor: Utah State Legislature
During the 2018 General Session of the Utah State Legislature, Sen. Daniel Hemmert sponsored a resolution, S.J.R. 2, which proposed to amend Article XIII, Section 3 [Property Tax Exemptions] of the Utah Constitution to “allow real property that the state or a local government entity leases from a private owner to be exempt from property tax, as provided by statute.”
This amendment would allow government entities to lease property without having to pay property taxes. While supporters argue this would avoid the possibility of government having to pay such taxes with taxpayer funds, opponents argue this would be a boon to landowners who lease to government, and could be especially favorable for charter school developers.
"YES" Vote Means
Would amend the Utah Constitution to exempt property from property taxes when it is leased by the State or a local government entity.
"NO" Vote Means
The Utah Constitution would not be amended. Property would continue to be subject to property taxes when leased by the State or a local government entity.
Arguments in Support
Government entities should not be using taxpayer monies to pay taxes.
Government entities are exempted from paying property taxes on property the entity owns. This constitutional amendment brings balance by creating a similar exemption for when a government entity leases an entire piece of property and as part of that lease, is responsible for paying the property taxes.
This constitutional amendment is simply giving the constitutional authority to implement a law, S.B. 76, that has already been passed.
Many House and Senate Democrats voted against the constitutional amendment at the time of passage during the legislative session.
Lawmakers who wrote the official argument against adoption of the amendment argued this is an additional benefit being given to landowners who lease property to the government, leading to a tax cut for those who do so. The taxes those landowners would have paid would instead be shifted onto the rest of property owners so that the same amount of revenue is brought into the city.
There have also been arguments made by some who believe this will be especially beneficial to charter schools, where developers build the school and then lease it to the organization running the charter school. As has happened before, when these two organizations — the developer and the charter school — are comprised of the same people, they then would be able to receive a tax break because the building is technically now being leased to a government entity.
View the official arguments in favor and against the proposed amendment here.
During the 2018 General Session, the Utah State Legislature passed S.B. 76, “Commercial Property Tax Amendments,” from Sen. Daniel Hemmert. This bill provided “a property tax exemption for real property that is leased entirely to the state or a local government entity.”
To implement this policy change, the Utah Constitution would have to be amended to allow for leased property to be exempted from property taxes. This need precipitated the passage of this proposed constitutional amendment.
There could be a reduction in costs to government with the elimination of property taxes on leased property. While local government would not miss out on tax revenue because of guaranteed rates, some property owners could see a rise in their tax rates due to this revenue shifting to the rest of the property tax base.
Utah State Legislature
House and Senate Democrats
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Information regarding the amendment was taken directly from the amendment language. Arguments and lists of important groups were taken from newspapers, websites, and groups. Citations are embedded directly in the text.
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