Lawmakers wanted $150M to expand school vouchers — but Utah Fits All Scholarship will get much less

Utah’s per-pupil funding for public schools will increase by 5%, costing $212 million, according to the latest budget projects.

(Trent Nelson | The Salt Lake Tribune) The Utah Capitol in Salt Lake City on Thursday, Feb. 22, 2024.

Legislative leaders took the wraps off of Utah’s final budget recommendations for the 2024-25 fiscal year on Friday night. It’s just the first step as the Legislature refines the $28 billion budget, which must pass before lawmakers adjourn for the year a week from now.

Utah lawmakers have spent the last couple of weeks behind closed doors cobbling together the overall framework of next year’s state spending. They still have until next Thursday to decide whether to fund legislation that carries a price tag of $15,000 or more. Those bills, along with any additional funding items, will be rolled into what is known as the “Bill of Bills,” which will be unveiled late next week.

In public education funding, the Legislature is boosting Utah’s per-pupil funding by 5%, or $212 million next year. Most of that extra money is the result of state law requiring the Legislature to cover the cost of inflationary increases and spending growth. That mandatory spending accounts for just over $161 million, or 3.8% of the total. The remaining 1.2% in per-pupil funding, just over $50 million, is a discretionary increase.

Private school vouchers, known as the Utah Fits All Scholarship, is in line for a $40 million funding boost next year — far less than the $150 million legislators had initially requested.

Another $150 million will go toward providing bonuses of up to $10,000 each for “top performing” Utah teachers.

Under this year’s HB415, public schools will no longer be permitted to charge students general fees or fees for classes, which will save secondary school students an average of $55 per year, according to the Legislature. Eliminating those fees, however, will result in the loss of an estimated $17 million annually. To help ease the financial hit, lawmakers have allocated $35 million in one-time money to offset those losses for the next two years.

One budgetary wish that has never been in doubt this session is yet another income tax cut. Legislative leaders set aside $160 million to cut the state’s income tax rate by 0.1 percentage point, from 4.65% to 4.55%. Updated revenue projections released earlier this month anticipate higher tax collections next year. Because of that, the price of the tax cut has increased to $167 million.

Lawmakers approved a 0.2% rate cut in 2023 and another 0.1% cut in 2022.

As with previous tax cuts, most of the benefits will go toward those at the upper end of the income scale. According to an analysis from Voices for Utah Children, an advocacy group for Utah youth, the top 1% of Utahns earning more than $800,000 per year will see their income taxes reduced by more than $2,600 annually. Utahs earning $100,000 or less per year will see their tax bill drop anywhere between $24 and $67 annually.

The money to pay for those income tax cuts comes out of revenues that the Utah Constitution specifies can only be spent on public and higher education and social services for children and disabled Utahns. Over the past three years, lawmakers have raided that fund for more than $640 million.

Lawmakers are also spending $2.3 million to expand the state’s child tax credit, which will now apply to children under five years old.

Legislators have allocated $18 million for a new program to help alleviate the state’s affordable housing shortage. HB572 creates a state investment fund to encourage the construction of new, affordable housing in the state. Financial institutions will be able to tap those funds to make low-interest loans to builders to construct new housing, and 60% of those new homes must be “attainable homes” — or new homes that cost $450,000 or less.

Lawmakers are putting $10 million toward alleviating homelessness. The money will fund a grant program for various projects across the state which will be overseen by the Utah Homelessness Council.

Lawmakers also plan to shift $1.725 million in federal funding from the Temporary Assistance for Needy Families (TANF) program to fund the NewGen: Youth Homelessness Solutions & Prevention initiative, which targets homeless youth between 12 and 17 years old, for the next two years.

Next year’s budget includes $15 million to fund the Utah Innovation Lab, which will be part of the new development at the site of the former Utah State Prison. The Lab is meant to be a public/private policy and technology catalyst.

Among some of the construction projects added to the budget on Friday night, is $25 million in unspent COVID funding that lawmakers are hoping to put toward a University of Utah hospital in West Valley City. The federal government needs to approve using those funds for the project. If that does not happen, the money will go toward improving broadband infrastructure.

State employees are in line to get a 3% cost of living increase next year. There also is money for targeted pay increases for certain state departments, including $13 million for corrections.