School funding bill would roll back ‘Our Schools Now’ tax hikes if the initiative passes in November

A Utah House budget leader has a new bill he says will funnel upwards of $700 million to public schools over three years – and thus remove the need for the Our Schools Now citizen initiative petition now headed for the November ballot.

Rep. Mike Schultz, R-Hooper, is the newly-appointed House vice-chair of the powerful Executive Appropriations Committee.

He told on Friday morning that he hopes his bill won’t be needed – that OSN leaders will step back and not go forward with their initiative – which would raise the state personal income and sales taxes slightly to get at least $715 million into school budgets each year.

That is a heavy lift.

But Schultz told UtahPolicy that “I really, honestly believe we can get there over three years without” the OSN tax hike.

In fact, his bill would automatically cut the state personal income and sales tax hikes in OSN by 0.45 percent each – so if adopted by the 2018 Legislature his bill negates the OSN tax increases, even if the petition passes.

Nolan Karras, a former Utah House GOP speaker and leader in OSN, said he has known about Schultz’ bill, HB299, for weeks.

“If all he was doing was removing” OSN funding regardless of the people’s vote in November, “It would offensive on its face,” said Karras.

But Karras said he’s talked often with Schultz and believes him a friend – trying to solve the “fundamental underfunding of Utah education for years.”

Schultz said as of now he doesn’t have the formal backing of House GOP leadership, nor the Senate, nor GOP Gov. Gary Herbert.

But Schultz believes there is a deal to be made between the Legislature, Herbert and Our Schools Now – which has some heavy hitters in Utah politics and society, like Zions Bank President Scott Anderson and Utah Jazz owner Gail Miller.

Karras said there are about 50 people leading OSN, and he can’t speak for all of them.

“We are well on our way” getting the 113,000 signatures needed to make the ballot, said Karras.

“We are fundraising very well,” he added.

“Whether we can rein in the effort at this point, I don’t know,” said Karras.

Back in 2014, the backers of Count My Vote were well on their way to making the ballot with their candidate nomination reform petition when they struck a deal with the Legislature – SB54.

That has turned out to be four years of hassle and attempted step-backs by lawmakers.

Maybe a deal with OSN would work out better.

Schultz said his bill is aimed at “putting revenue into silos of funding” and would, in effect, provide around $700 million more toward public ed over the next three fiscal years – with the $700 million ongoing each year thereafter.

But Karras – who understands state budgeting – said Schultz can’t legally commit future Legislatures to specific spending models, although he admires and appreciates Schultz’ efforts.

Before the 2018 session started, Sen. Howard Stephenson, R-Draper, told a public policy conference that he believes he can raise more than $700 million over 10 years for schools via property tax changes.

But Schultz’ promises are more specific – pushing more income tax and sales tax toward schools – and would raise the $700 million much faster – over just three years.

Said Schultz: “I hope there is a path forward” to negotiate with OSN and stop their initiative.

His funding plan will put in significant monies for:

  • better teacher pay.
  • better teacher training.
  • ensure all kids meet reading and other standards by third grade.
  • focus on English, math, science and computer training.
  • put a lot more money into school technology.

With or without OSN, said Schultz, we can’t do a lot about class size – we just have so many new kids coming into schools and facility limitations.

But we can get teacher aides or two teachers into a classroom, and thus be able to help with teachers having too many kids to effectively teach, he said.

Schultz said from 2015 to 2018 (the current fiscal year), lawmakers and Herbert have put an extra $830 million into schools – a 20 percent increase.

And even more can be coming, he said.

But OSN’s 0.45 percentage point tax hikes in personal and sales tax is too much, said Schultz, and would not only harm Utah’s economy – Herbert’s reasons for not supporting the initiative – but would harm “low and moderate-income Utahns too much.”

He provided a chart which shows a Utahn making just $10,000 to $20,000 a year would see tax hikes of 17 percent, while those making $200,000 a year only a 10 percent tax hike (mainly because poor folks spend their limited monies on taxable items, while wealthy folks save more and don’t spend as much of their income on taxable items.)

20180202 OSN Chart

“I hope we can work something out with OSN,” said Schultz.

And the citizen initiative won’t go forward, with clear promises from lawmakers that $700 million will come to schools each year at the end of three years.

Otherwise, Schultz’ bill could be passed this session, and voters’ choice in November neutered even before it takes place.