It’s that time of year again! Property taxes are coming due and it’s clear that the largest chunk of these taxes goes to local school districts for our local public schools. Why are our taxes increasing and what can we do about it?
Let’s be perfectly clear: The people have a right to know how their money is being spent and why. If we don’t like it, we can and will hold elected officials accountable through the ballot box.
All that said, it’s actually the state legislature’s job to fund our local schools – Utah’s state constitution clearly states “The Legislature shall provide for the establishment and maintenance of the state’s school systems” (italics added). But the Legislature has the power to create and use additional funding streams, and they do. Funding for local public and charter schools currently comes from Federal funds (~12%), state funds (~64%), and local funds (~24%) and this balance has shifted – local funding only provided 12% of the Basic School Program cost in 2015.
For about 75 years, the Legislature has used Income Tax almost exclusively to fund Education. When the Income Tax was created in 1931, it was a progressive tax with higher rates for higher earners until 2007 when Utah switched to a single-rate Flat Tax of 5%. According to a 2016 Utah Foundation study, Utah Education loses out on more than $1 billion each year due to tax changes like this. Since 2007, the Legislature has championed multiple “Year(s) of the Tax Cut.” When Income Taxes are cut, there is less money available for public education. At the same time, the Legislature passes more than 100 Education bills each year, many of which are unfunded or insufficiently funded mandates.
Who gets left holding the tax bag? Our local school districts. And you.
Local districts have limited options to raise funds – property taxes and voter-approved bonds, primarily. Your property tax burden is also directly impacted by decisions made by the State Legislature and local municipalities.
Every time the Legislature cuts income taxes, it gives the highest earners the biggest tax breaks. When the Legislature gives businesses tax exemptions as incentives, like Breeze Aviation and hundreds like it, they bring in more jobs and build Utah’s economy but don’t pay their fair share of property taxes. This shifts the tax burden to property owners to the tune of more than $200 million every year. Property owners – whether we can afford it or not – have to make up the difference.
The mix of commercial property and homes also directly impacts your tax bill. Commercial property owners pay taxes on the full value of their properties while homeowners get a 45% valuation reduction. In other words, commercial property owners pay about twice the taxes homeowners do. When local municipalities and zoning boards do not plan for or encourage commercial development, they miss out on the higher property taxes these entities would pay. When local municipalities, like the Legislature, use tax breaks to incentivize business development, they are also shifting the tax burden to local property owners. The Inland Port Authority is doing the same thing with tax increment financing.
Finally, the market also affects your taxes. When property values change, tax rates “float,” automatically adjusting up or down, to ensure no change in revenue (excepting growth) unless there are Truth in Taxation hearings. But this applies to total revenue, not the tax on individual properties. When home values rise faster than the value of commercial properties, as we’ve seen happen since 2017, the tax burden shifts from commercial properties to homeowners.
I’m all for low taxes and smart investments that encourage appropriate development, but we must hold elected officials accountable at every level for how they choose to fund or defund our local schools. And it’s on us to understand the system – income tax cuts and property tax incentives shift education costs to local property owners.
There are limited options for relief, such as tax reductions and deferrals for the old, tax breaks for Disabled Veterans, the blind, and some others, but there is not enough relief to care for the truly vulnerable.
Speak up and vote for candidates this Fall who truly are wise stewards of our public tax dollars, and those who will ensure the tax burden is distributed fairly.
Deborah Gatrell is a high school Social Studies teacher, a Veteran with more than 25 years of service, and a candidate for Utah State Board of Education district 10. Her opinions are her own.
