Utah legislative leaders believe they are closing in on a school funding compromise with education stakeholders that will allow them to move forward in an effort to remove the constitutional earmark for education funding. It’s possible that some elements of that compromise plan could be made public next week.
“At a high level, we’re working towards finding a place where removing this constitutional earmark, which quite frankly hasn’t really served us very well, makes sense,” said House Speaker Brad Wilson (R-Kaysville) during a capitol media availability on Wednesday. “How do we replace that potentially with something that is more of an actual funding system that creates some predictability and sustainability for public education.
Legislative and education sources tell UtahPolicy.com that the negotiations are zeroing in on a mechanism to tie property tax revenue that goes to schools to the economy, likely inflation. That would allow that revenue to grow outside of the current truth in taxation process. UtahPolicy.com is also told that those property tax increases will have a cap to prevent property taxes from rising too dramatically. If a local entity wants to increase its overall property tax rate, it would still need to go through the truth in taxation process.
That may be a hard sell as many lawmakers will be wary of property tax increases. At the same time, members of the education community are suspicious that legislators will not meet their obligations to fund education without a constitutional mandate to do so.
It’s clear that lawmakers are zeroing in on getting local entities to do their part to boost education funding. Over the past 5 years, legislators have increased overall funding for education by 30%. During the same period, local funding for schools through property taxes has only increased by around 10%.
Lawmakers bristle at any suggestion that scrapping the constitutional earmark for education will give them license to not meet their obligation to adequately fund schools. To counter those claims, there is an effort to include a commitment or guarantee from the state to fully fund the annual growth in student populations. Some ideas being batted around include tying the basic unit of funding used in Utah schools, known as the weighted pupil unit (WPU) to inflation, or a possible constitutional amendment guaranteeing a certain percentage of the state budget goes toward education.
“If we were two horses pulling a wagon, we would be going in a circle,” says House Majority Leader Francis Gibson (R-Mapleton). “Only one horse is doing the work right now. Local elected officials and school boards need to make some hard decisions.”
The education funding is just one part of the effort to overhaul Utah’s tax code. Speaker Wilson told reporters on Wednesday they anticipate making their latest tax reform proposal public on Friday ahead of the next tax reform task force meeting on Monday. UtahPolicy.com is told House leaders have been meeting with small groups of members of the Republican caucus for several weeks to get feedback as they refine the proposal.
“I feel really good that we’re getting close to a place where we’re going to be able to fix our structural imbalance,” said Wilson while declining to go into too many specifics about the forthcoming proposal. “We’re creating a number of new avenues of sales tax and, at the same time, reducing everyone’s income tax.”
In addition to a reduction in the income tax rate, dropping it from 4.95 percent to just under 4.6%, legislators are discussing ways to increase funding for transportation. Roads in Utah are supposed to be funded from money collected by the gas tax, but legislative leaders point out that gas tax revenues are not keeping up with demand as more and more Utahns switch to electric vehicles or cars that get better gas mileage. Wilson says they are exploring other funding mechanisms for transportation, including user fees.
“The bill actually charges UDOT to go out and get us to a new user fee sooner rather than later, and asking them to focus on that effort over the next three to five years,” says Wilson.
One of the most controversial proposals that Republican lawmakers are discussing is replacing the state portion of the sales tax on food while giving lower-income Utahns a tax credit to offset the higher price on groceries. The current proposal gives families earning less than $60,000 per year a refundable tax credit of $125 per person in the household, with a cap on the number of people able to earn the credit. Wilson also says they're working on other ways to lessen the tax burden on lower-income Utahns that will be in the draft proposal due on Friday.