Tax hike compromise to replace Our Schools Now easily clears first hurdle on Utah’s Capitol Hill

If the first public debate in the Utah Legislature was any indication, a proposed compromise to boost school funding without the Our Schools Now ballot initiative appears poised for passage in the waning hours of the 2018 session.

Members of the House Political Subdivisions Committee voted late Wednesday 12-1 to move HJR20 to the full House for debate, following unanimously supportive testimony by members of the public.

If approved by lawmakers before Thursday’s midnight adjournment, HJR20 would place a non-binding question on the November ballot, letting voters indicate their support for a gas tax increase of 10 cents per gallon.

“We support this bill,” said Beth Holbrook, president of the Utah League of Cities and Towns. “And we support the opportunity of the voters to go ahead and make this decision.”

The gas tax question would run in place of the Our Schools Now initiative, which is aimed at getting voter approval to enact an income and sales tax hike to boost annual school funding by more than $700 million.

Under the legislative compromise, the gas tax increase would generate roughly $120 million, which would free up an equivalent amount from the state’s General Fund that could then be directed toward public education. That would be combined with a five-year freeze on a statewide property tax to generate roughly $375 million for schools when fully in place..

“We need some additional funding,” said Nolan Karras, a former Utah House speaker and a leading Our Schools Now organizer. “We hope that this Our Schools Now fund, that we think is going to be built by this, will give schools tools to go beyond that basic survival level.”

While no one spoke against HJR20 in committee Wednesday, tax-averse groups such as the Utah Taxpayers Association and Libertas Institute privately expressed reservations about the broader compromise plan.

Billy Hesterman, vice president of the Utah Taxpayers Association, said a gas tax increase is preferable to an income tax hike, but that his group had not taken a formal position.

Asked about the companion legislation that would freeze a statewide property tax for five years while assessed property values rise, Hesterman said lawmakers had added “enough sugar to help you swallow it down” by including a small decrease in the state’s income tax rate.

That bill, HB293, is awaiting consideration by the House and would equalize school district funding disparities by providing matching state dollars to areas with low property tax values.

Because gasoline tax revenue does not fund education directly, much of the Our Schools Now compromise would need to be written into law during the 2019 legislative session.

Some lawmakers questioned whether voters would be able to distinguish the multi-step benefit to schools while voting on a gas tax increase.

Resolution sponsor Rep. Becky Edwards, R-North Salt Lake, said simplicity was required for the November ballot, and that it will take the work of supporters to educate the public.

“I think keeping it simple is better than having a five-paragraph essay on the tax imbalance in our state,” Edwards said.

Wilford Clyde, chairman of the Salt Lake Chamber, said Utah’s business community is behind the compromise, both for its benefit to schools and for funding it would generate for road projects.

“Most people in the know, know that money was taken from the General Fund to take care of transportation,” Clyde said. “We need to replace that, and that’s why we need to have the gas tax.”