'Glitch' keeps $24M in tax revenue from schools

'Glitch' keeps $24M in tax revenue from schools


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SALT LAKE CITY — A $75 million property tax increase passed by the Utah Legislature last year has already made an impact in dozens of school districts across the state.

Many schools have used the funding to bring on additional teachers to reduce class sizes, raise teacher salaries, construct new buildings and make other improvements, according to a report presented Wednesday to the Public Education Appropriations Subcommittee.

But about $24 million of the new revenue has been held back from reaching schools because of a legislative "glitch" that left the funding distribution limit, known as the state guarantee rate, too low, according to lawmakers.

It's kept some schools from making further improvements to school operations, but lawmakers said they hope to resolve the issue in the base budget bill for public education, which is expected to be approved early on in the legislative session that begins Jan. 25.

"There needs to be language changed in the statute to allow the distribution of that money," said Draper Republican Howard Stephenson, Senate chairman of the subcommittee. "We will need to address that probably in the first part of our meetings."


The tax increase was implemented through SB97, which raised the basic property tax rate for the first time in almost 20 years. The new rate meant an annual tax increase of $46 for owners of residential property worth $200,000. It was intended to bring greater equity to school districts that had a high taxing effort but low levels of revenue.

All 41 of Utah's school districts raised taxes, but the added revenue was given to 28 districts to bring them up to the same per-student funding level guaranteed to charter schools, which was estimated last year at $1,746.

About $55 million of the statewide revenue was devoted to general operation funding for schools, and about $20 million was set aside for capital needs. Using funds that were available, 15 districts increased employee compensation, six districts hired additional teachers to reduce class size and six hired additional staff, according to Wednesday's legislative report.


Money designated for capital needs helped seven districts build new schools or make campus improvements, three districts fund maintenance and repairs, and three districts pay for technology infrastructure upgrades.

Other uses for the funding include instructional technology, curriculum and textbooks, student transportation, and security and resource officers.

None of the 28 districts that received the funding has overspent its allocations despite the $24 million shortfall, Stephenson said, but it's money districts have planned on being able to use for similar objectives.

"These (dollars) are going for good purposes," he said.

Funding going forward

But some lawmakers say equity funding going forward should come from another source, such as growth from the income tax, to spread the costs more evenly.

Using revenues from property taxes for equity funding inherently poses an accountability problem, especially for residents of the 13 districts that did not benefit from the tax increase, according to Rep. Marie Poulson, D-Cottonwood Heights.

If they're paying their property taxes, one of the things they'd really like is (to have) their taxes go to their district.

–Rep. Marie Poulson

"If they're paying their property taxes, one of the things they'd really like is (to have) their taxes go to their district and that they can have some accountability for how that money's spent," Poulson said. "As we go further into equalization, I think it really removes that opportunity for our taxpayers to have a say and hold those people accountable."

Those districts that received revenues from the tax increase were required to maintain a certain level of taxing effort. But Sen. Lyle Hillyard, R-Logan, said state and education leaders should ensure funding shortfalls continue to be addressed locally as much as possible.

"We really need to look at equalization," Hillyard said. "But we need to look also in a way that school districts should be encouraged to keep up with everyone else."

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Morgan Jacobsen


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