Tax hike would raise $36 million in a year, and more each following year until 2023, to equalize school funding

(Trent Nelson | Tribune file photo) Rep. Bradley G. Last and Rep. Brad R. Wilson, R-Kaysville, Tuesday January 30, 2018.

Utah lawmakers are considering two methods for easing the funding disparities between school districts — one that would divert funding from existing sources and one that could generate hundreds of millions of dollars for public schools by raising taxes.

The first proposal has a head start, having received preliminary approval by the Utah Senate. But the latter is now on its way through the Legislature after being approved Monday in a 7-5 vote of the House Education Committee.

Republican committee members were split 5-5 on the tax increase, with Democratic members providing the necessary votes for advancement to the full House. House Bill 293 would freeze the rate of a statewide property tax, known as the basic levy, that currently adjusts downward as property values increase.

“If you look at the basic rate over time, it has deteriorated so far,” said Rep. Brad Last, R-Hurricane, the bill’s sponsor. “I think it makes sense to, at least for five years, freeze that rate.”

If approved, HB293 would generate about $36 million in its first year, distributing the money to school districts that have the least ability to generate revenue through local property taxes. Based on current trends in property values, the measure could pull in as much as $167 million in new annual revenue for public education over the five-year freeze.


Would raise $36 million for school funding equalization, and additional amounts each year, by freezing the rate of a statewide property tax. - Read full text

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The impact on taxpayers, Last said, would be an additional $14 in property taxes on a $250,000 home.

“It’s a fairly modest increase,” Last said. “But when you look at it overall, it does produce a significant impact statewide.”

The question of school equalization has been a frequent point of debate on Utah’s Capitol Hill. Schools receive an equal per-student share of the state’s income tax, but supplemental funding through local property taxes varies significantly throughout the state.

Previous efforts have drawn opposition because they would either take money from one school district to fund another, or they would draw from statewide funding to increase the per-student spending all schools use to hire teachers and address inflationary costs.

“If we’re adding revenues, then there’s no losers,” said Rep. Marie Poulson, D-Salt Lake City. “It just depends on your district how much you’re going to get.”

Representatives from the Utah Education Association, the Utah Parent Teacher Association, the Salt Lake Chamber and the Utah School Boards Association spoke in favor of the bill.

But Billy Hesterman, vice president of the Utah Taxpayers Association, was skeptical that the freeze on the tax rates would be allowed to expire after five years. He said the talk about avoiding winners and losers among school districts ignored the impact on property owners.

“I think everyone is forgetting that there is a loser,” Hesterman said, “and that’s the taxpayer.”

Rep. LaVar Christensen, R-Draper, said he was worried about elderly Utahns who live on fixed incomes. Their tax bills would increase under HB293, he said, but their ability to pay those taxes would not.

“They’re not making more money,” Christensen said. “They’re just living in the same home.”

Lawmakers need to consider a comprehensive reform of Utah taxes, he said, rather than unconnected bills that affect Utahns.

“It’s so hard to make this decision in isolation,” he said. “We’ve got to play the whole piano.”

The committee also questioned the need for the bill in the face of initiatives like Our Schools Now, organizers of which are gathering signatures to place an income- and sales-tax hike on the November ballot.

Rep. Dan McCay, R-Riverton, said lawmakers are looking at how to spend about $500 million in increased revenue this year through growth in income and sales taxes. By raising property taxes, he said, the Legislature would be thanking Utahns for their money while asking for more.

“I guess we’re so worried about [Our Schools Now] ruining the economy,” McCay said, “we want to go ahead and do it for them.”

Last‘s bill will compete with Senate Bill 145, a proposal by Sen. Lincoln Fillmore, R-South Jordan, to equalize school district funding by diverting money from annual growth in the income tax.

Fillmore has said he intends to run SB145 independent of Last’s HB293, but that the two bills could be combined to double Utah’s equalization effort or to cut the cost of each bill in half.

On Monday morning, Fillmore was present in the House chamber, talking with Last and other House leaders during floor debate.