Lawmakers frustrated by efforts to find new way to fund schools

Utah Capitol 18

If the Utah Education Association, and other public education advocates, don’t come to the table to have “honest discussions” about finding a long-term, stable education funding source, then another state income tax rate cut is coming, for sure, Utah House Speaker Brad Wilson told on Thursday.

In short, said Wilson, the current state Constitution earmark that all income tax revenue go to public and higher education is actually HARMING public school financing, because as the General Fund’s sales tax lags behind income tax revenue growth, legislators and the governor will have to cut income taxes as they find ways to increase General Fund revenues.

This is exactly what they did in the recent tax reform package, which cuts the income tax by $160 million, lowering the rate from 4.95 percent to 4.66 percent.

It’s a complicated issue, Wilson admits, adding that he strongly supports public school funding, teachers, administrators, and others who provide such a valuable service to the state.

And it’s much easier for the UEA and other public school advocates to shout: “Don’t amend the Constitution, don’t take away the earmark.”

But the reality is, said Wilson, a compromise floated by himself, Sen. Ann Millner, R-Ogden, and others that would have guaranteed certain funding levels for schools — apparently not going anywhere with the UEA and other school advocates — would have resulted in 15-20 percent MORE for schools over the last 20 years, or roughly $2 billion more.

Yet school advocates strongly oppose tax reform.

“And all to save the earmark; which has and is doing nothing, nothing,” for stabilizing or guaranteeing public school funding, said Wilson, who admitted that he is frustrated over efforts to settle the school funding issue.

The earmark does nothing because the Legislature and governor have never appropriated ALL of the income tax revenue to public schools, but shares it with higher education. Thus, K-12 schools get what lawmakers and governor say they will — almost double over the last 10 years — but not all of what the earmark produces.

Accordingly, Wilson guessed that there will be no action in the upcoming 45-day general session to find a real solution to the state’s “structural imbalance” between the General Fund, fueled by sales taxes, and the Education Fund, which gets its money from the personal and corporate income tax.

Wilson is also frustrated by Analytics recent poll that showed two-thirds of Utahns don’t want to remove the income tax earmark from public schools, even if some other formula can be found to provide schools with the same, or even more, funding.

“It’s the wrong question,” said Wilson.

“What if you asked: Do you favor a new funding system for public schools that would have given you 15-20 percent more for schools over 20 years?”

What would be voters’ reaction to that? Asked Wilson.

The speaker adds that he doesn’t see much of an issue with GOP Gov. Gary Herbert saying Wednesday that he doesn’t support removing the constitutional earmark, since no one really would like such a change if there wasn’t a guarantee replacement that could actually stabilize funding and bring more money to schools.

Without that overall compromise with public education advocates, said Wilson, there really is no chance the Legislature will vote to remove the earmark, even though there will be several bills introduced to do just that.

Several GOP legislative leaders have been quietly talking to public education “stakeholders,” like the school board association, public school administrators and the UEA, for months, trying to work out some kind of compromise on removing or modifying the constitutional income tax earmark. first reported on the talks several months ago.

Talks haven’t yet produced a workable agreement, Wilson confirmed Thursday.

And so when the tax reform package was passed in a December special session, no amendment was proposed. The Legislature starts its 45-day general session Jan. 27.

If not passed then, a special session would have to be called later this year in order to get such an amendment on the November ballot.

It takes two-thirds vote of both the Utah House and Senate to propose a constitutional change, which then must be approved by majority vote of citizens in a general election. Neither is likely without a public agreement with education advocates.

The governor has no official role in a constitutional amendment. But if he/she strongly opposed any amendment, it likely would fail, if not in the Legislature, then at the ballot box.

GOP legislative leaders couldn’t muster a two-thirds vote for the tax reform bill, which is certainly less controversial than an amendment uncoupling income tax revenue from public and higher education funding.

In major part because of the current constitutional earmarking, lawmakers and the governor are in a budget-setting bind: While the income tax is growing by leaps and bounds, the state sales tax is lagging behind, getting larger year by year, yes, but not keeping up with inflation.

The sales tax funds the General Fund — most non-education state programs — and a large part of the Transportation Fund.

Because of the earmarking, the personal and corporate income tax funds public and higher education.

Removing the earmark gives lawmakers “flexibility” in moving tax revenues around to where they are most needed. Utah is the only state with such an earmark for a major tax source.

And to keep Utah one of the best managed states in the nation — recognized as such by a variety of sources — the decoupling should take place, GOP leaders say. Other, better ways can be found to guarantee that education funding grows with inflation and the growing number of students each year.

But Utah voters aren’t buying it. The new Y2 Analytics survey finds 65 percent oppose removing the earmark, even with funding promises by state leaders for public schools.

Only 35 percent support such a change.

“I’ve not said take the earmark off,” said Herbert, who is the most popular state officeholder, Y2 polling shows.

“But we should have a discussion, on everything, on the best tax policy.”

This is what Wilson also wishes.

“I am 100 percent certain that if (a new stable education funding system is not found) then you will see another income tax cut within 10 years,” the speaker said.

And how will that help stabilize public education funding? “It doesn’t,” Wilson said.

But the UEA and other school advocates refuse to enter into “serious discussions” over how to solve that problem, preferring instead to just demand that the earmark won’t go away.

It’s a political problem GOP lawmakers can’t solve; and which Herbert recognizes.

Herbert said the public may like the earmark because it appears to “provide a security blanket” for public schools.

But Wilson said the earmark really doesn’t do that. Just the opposite, it all but guarantees another income tax cut within the decade, and thus less of a base for school funding stability.