Monday, July 17, 2017

Counties sue state to overturn Legislature’s ‘unfair’ tax breaks for airlines

Utah homeowners and businesses are paying higher property taxes to make up for unfair discounts that the state is giving to the airline industry, five counties contend in a new lawsuit.

Salt Lake, Weber, Washington, Duchesne and Uintah counties filed the lawsuit Monday in 3rd District Court seeking to overturn two recent laws enacted by the Legislature that they say gave an unfair 39 percent discount to airlines.

It says the Legislature forced changes that "cause property tax assessments in the airline industry to fall well below fair market value" in violation of the state Constitution, and shift "tax burdens from airlines to other individual or small business taxpayers."

Sen. Curt Bramble, R-Provo, who sponsored the legislation that the counties seek to overturn — SB157 this year and SB165 in 2015 — says the counties' claims are false.

He said the legislation "was not to give any one group an advantage. It was to clarify under the Constitution what fair market value is for aircraft," he said.

He said it uses the "airliner price guide" to figure the retail value of aircraft. "It's sort of like the Kelley Blue Book for airplanes," Bramble said.

But the laws offer discounts from that for fleet pricing. "For example, if you buy a fleet of cars, you get a better price than if you buy one car," Bramble said. "The law uses the retail price minus the fleet discount" to assess value.

But counties argue in their lawsuit that the fleet discounts allowed are too generous, and methodology is flawed.

Their lawsuit said methodology used by SB157 this year reduced "the 2017 assessed system value of one airline from $26.2 billion to less than $14.7 billion," a 44 percent decrease compared to the previous system. "The 2017 Utah taxable values for seven major passenger airlines decreased by roughly 39 percent overall."

The fiscal analyst for the Legislature predicted that SB157 this year "may shift some portion of the $12 million in property tax burden of airlines to other individuals and businesses."

The lawsuit said that when the Legislature passed an earlier pilot project bill, also sponsored by Bramble, to test the system used by his later bills, it said the Utah Tax Commission said the sort of price guidelines used should not be the preferred method used to value airline property — but the Legislature adopted the later bills anyway.

Recent legislation also limited counties' ability to appeal property — such as aircraft — assessed by the state. Counties said the lawsuit is the only way remaining to challenge what they say are unfair assessments.

"Citizens should be able not only to question this unfair and unjust shifting of tax burdens onto them, but also to demand the rules be applied equally," said Salt Lake County District Attorney Sim Gill. "If the counties do not defend the average taxpayer, it seems no one else will."

"Citizens expect principles such as tax fairness and transparency to be followed, which isn't the case here," said Salt Lake County Mayor Ben McAdams. "That is why Salt Lake County is joining in this lawsuit on behalf of homeowners and small business owners, to ensure that their voices are represented as well as those of large industries."

Bramble complained that Salt Lake County, which leads the lawsuit, refused to testify on his bill this year — and took no position on it.

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