As expected, Governor Larry Rhoden is punting property tax relief to the counties. Instead of building on the numerous proposals the Legislature’s interim task force spent the summer cooking up, Rhoden offers Senate Bill 96, the same basic county sales tax plan he proposed last March. Rhoden’s plan is better than a kick in the pants, but it offers little real relief to taxpayers and zero budget help to counties.
SB 96 isn’t real tax relief; it’s just a tax shift, allowing counties to implement a gross receipts tax of up to 0.5% on “all sales of tangible personal property, any product transferred electronically, and services, that are taxable pursuant to chapters 10-45 and 10-46 in the county.” So instead of paying taxes on your house, you’d pay more taxes for your groceries and home repairs. Governor Rhoden sells his plan on exaggerated claims of the merits of shifting the tax burden from home-owners to out-of-state visitors. Renters will come out worse, as their rents won’t go down and their grocery bills will go up. Big-money visitors who buy property here may get tax breaks on their luxury cabins but not be around all year to repay that break in county tax on goods and services.
And morally, don’t we have an obligation to base our tax system on the diea that we should pay our own way instead of shaking down our guests?
The Legislature has long resisted giving counties the power to tax sales that cities enjoyed. SB 96 would do counties a favor but still treat them as lesser forms of government. Cities can set sales tax rates up to 2% and tack on an additional 1% gross receipts tax on drinking, dining, dancing, and other entertainment. SB 95 allows counties that measly 0.5% general gross receipts tax, far less than their constituent cities may levy.
Cities collect their sales taxes on top of their property taxes and can invest them in expanded services. SB 96 will not give adopting counties more money; Governor Rhoden’s plan mandates that counties spend every dollar of their gross receipts tax to reduce property tax, first on owner-occupied property, then on agricultural and commercial property. Governor Rhoden’s talking points emphasize that point promising that SB 96 “does not grow local government.” SB 96 thus won’t help counties build better roads and jails; it will just change how you pay for your status quo services.
SB 96 requires adopting counties to convert their gross receipts tax revenue into flat-rate tax breaks on all property. Section 7 says, “The governing body of a county shall allocate all moneys in the county’s property tax reduction fund as a credit against the county property tax levy on all property classified as owner-occupied, as defined in § 10-13-39, in an equal percentage.” So counties don’t get to offer any sort of progressive property tax relief. They don’t get to target tax relief first at lower-income folks living in smaller, less valuable houses—the folks who will likely pay a higher percentage of their income toward the new county tax on their groceries and repair bills. SB 96 counties would have to knock the same percentage off the levy on every house. So the ritzier the house, the more money the owner gets back.
Team Rhoden’s calculations from 2024 tax data indicate that a 0.5% sales tax in every county would have generated $164.4 million, just $10.2 million shy of the $174.6 million the counties collected from taxing owner-occupied property that year. But that doesn’t mean homeowners’ property taxes will drop 94%. SB 96 only applies to county property tax, which in 2024 only made up 26.8% of property taxes collected throughout the state. Schools account for more than half of the property tax bill, and schools, cities, townships, and other special districts will continue to tax homes and businesses unabated by SB 96. At best, the average homeowner’s property tax bill goes down 25% while the county nickels and dimes that money right back at the grocery store.
“The only plan I’ve seen that makes sense is my own,” says the very narrow-minded Governor Rhoden. Sure, SB 96 makes sense if all you want to do is (1) tamp down a property tax revolt by shifting county costs into a less noticeable sales tax, (2) put the burden of action on the counties and avoid any culpability for the Governor, and (3) not engage in any intellectually challenging or politically courageous conversation about real comprehensive tax reform and improvement of public services, both of which we need but neither of which Rhoden is willing to talk about.