Utah Capitol 31

House leaders said Wednesday morning a proposal to add some services for the disabled and children to the current constitutional earmark for income tax is about providing budget surety for Utah’s public schools.

“This is really about shoring up education funding,” said House Majority Leader Rep. Francis Gibson, R-Mapleton. “Education has a revenue guarantee, but it does not have a funding guarantee. This is a funding guarantee.”

The plan, first reported by UtahPolicy.com, amends the Utah Constitution to include some expenses for children in Utah and disabled services to earmark that says all income taxes must go toward public education. That move alone could free up $500 to $600 million annually in the state’s General Fund, which is fueled by sales taxes. 

At the same time, lawmakers plan to create a $100 million fund that will be used to fund enrollment growth and provide a consistent source of ongoing money for education. The fund would also grow with inflation.

Adding two more things to the constitutional set-aside may raise fears that lawmakers will short-change education when times are tough. To soothe those misgivings, lawmakers are proposing to move most of the education budget into the Uniform School Fund, which is a constitutionally protected source of money that would shield K-12 funds from being raided for other purposes.

“The tax commission sends that money directly to the Uniform School Fund,” said House Majority Whip Mike Schultz, R-Hooper. “Let’s say we have $3 billion in that fund, and this year we raise spending by $300 or $400 million dollars. That’s the starting point for the next year.”

“We think this is the best way to ensure education funding and to make sure people feel at ease,” said Gibson. 

“Setting up this account that grows over time and giving more stability to the education community sends a clear message that we’re serious about this, and we want to fund education going into the future,” he continued.

After the collapse of the tax reform measure, which would have cut income taxes while raising some sales taxes in order to provide more money to the General Fund, lawmakers say they only have a few years before they hit a fiscal cliff. Yes, they do have more than $900 million extra to spend this year, but more than $800 million of that is in the Education Fund, which can only be spent on schools. Money for other state needs, such as state employees or increased costs for Medicaid, is growing scarce as sales tax revenue is not growing nearly as fast as income taxes. 

Adding disabled and child services to the income tax earmark requires a ⅔ vote in both the House and Senate in order to put the question on the November ballot where it must win approval from a majority of voters. Since the question requires a positive vote, it must go to the ballot either this year or it must wait until 2022.

“This is basically our last option,” said Schultz. “If we don’t do it this year, then we have to wait, which puts it into the 2023 fiscal year budget, which is problematic because at that point in time we will have likely hit a fiscal cliff.”

Legislative leaders are still working out some details with education stakeholders before making the proposal public UtahPolicy.com is told.