Lawmakers considering tax reforms to boost school funding, but they still won’t raise as much as proposed ballot initiative

Two legislative property tax “reforms” that could bring in more than $700 million into public schools over the next decade is, as of now, not enough to stop the Our Schools Now citizen initiative.

Sen. Howard Stephenson, R-Draper, head of the Utah Taxpayers Association, told his group’s annual pre-legislative conference in the Grand America Hotel on Monday that OSN will consider two of his task force’s school property tax reforms, as OSN goes forward with its gathering of 113,000 voter signatures to get on the November ballot.

However, spoke with Nolan Karras, a leader in the OSN effort. He said his group favors any steps the Legislature may take in getting more money toward public schools.

But Karras points out that the two “reforms” Stephenson is talking about would bring in the hundreds of millions of dollars over 10 years.

While OSN would raise the state sales and personal income taxes by 0.45 percentage points each and bring in around $700 million in just several years (the tax hikes are phased in under a reworked petition you can read here).

A special legislative tax reform task force has come up with a number of recommendations – which will be considered in the 2018 Legislature, which starts in just three weeks.

One would allow local government entities, like school districts, to take a certain percent of inflation in property tax before having to go through Truth in Taxation – a law that requires public hearings, notices and such before the tax can be taken.

Over the years, said Stephenson, local governments and schools have either decided it was too risky politically to go through the Truth in Taxation process, or went through it only to see voters fight against it.

Even conservative GOP legislators are willing to look at giving a certain percentage inflation increase without Truth in Taxation.

But Stephenson warned that no one, even himself, can’t guarantee what the 2018 Legislature will do until midnight of adjournment, in early March.

That inflation adjustment could bring in up to $240 million over 10 years.

The other reform is more complicated to explain.

Utah has the Uniform School Fund which equalizes personal and corporate income tax take for each student in the state.

But schools also rely on local property taxes to fund local K-12 schools. And there is great disparity across the 41 districts in how much property tax citizens can afford and pay into their schools.

There could be an “equalization” of property tax across the state, which would be supported or opposed depending on where your district sits financially.

But if the state did that, said Stephenson, more than $700 million could be raised over a decade, and each Utah school child would see about the same amount of money coming to his education through the effort.

In a telephone interview, Karras, a former GOP House Speaker, said while he can’t speak or commit for OSN as an entity, he and other OSN leaders would love it if the Legislature solved the year-after-year shortfalls in public education fund.

The Legislature “is where this should be solved: the Legislature” can act quickly and with more shades of funding and lawmaking, said Karras.

In some ways, a citizen initiative petition, while finely crafted in OSN effort, is still a blunt instrument.

“We are continuing our effort” of gathering signatures, said Karras. And that effort is not stopping because of what Stephenson and his task force suggests – or even what the Legislature may do over the next few months.

While early polling by showed considerable support for the OSN tax hikes for schools, the latest Dan Jones & Associates survey finds just 50 percent in favor of the revised initiative.

While 48 percent oppose it.

So while it is almost certain that OSN will get the 113,000 signatures and make the November ballot, whether the tax hike for schools will pass is unclear.

Karras said the Truth in Taxation and other legislative initiatives over the years have “cut off one leg” of Utah’s public schools/local and state government traditional tax three-legged stool funding – the property tax.

And lawmakers should do something to fix that, said Karras. (Stephenson clearly agrees.)

If the 2018 Legislature makes the property tax “reforms” Stephenson talked about Monday, “that is a great first step,” said Karras.

And it should happen.

But don’t expect such reforms to stop the Our Schools Now citizen initiative – for it is going forward.

However, politically speaking, should lawmakers make Stephenson’s recommendations, those opposed to OSN in the upcoming public debate could use the $700 million-plus over 10 years passed by the 2018 Legislature as an argument to vote down OSN.