Sen. Adams bill would reduce property tax, raise sales tax

SALT LAKE CITY — If you took away the ability of school districts to raise property taxes for construction projects, homeowners in every district would see their property tax bills fall.

The decrease could be dramatic for property owners, since the average home is valued at $250,000.

In Park City, Daggett or Rich school districts, that drop would be under $100 a year. But in districts such as Tooele, the property tax bill would drop by $992. In South Sanpete, it would drop by $826.

Shifting that revenue to sales tax would allow districts to collect the same amount of money.

Sen. Stuart Adams, R-Layton, co-chairman of the Revenue and Taxation Interim Committee, presented his plan to "equalize" tax revenue for school districts across Utah.

Instead of districts getting their construction money from property taxes, they could get it from sales taxes, he says.

Adams' proposal would increase the state sales tax rate by 1 percent to 5.7 percent for all purchases, including food and food ingredients, which are currently taxed at a lower rate than nonfood items.

Adams says he recognizes the interim committee will be involved with a significant amount of debate going forward.

And he expects committee members to debate how much more palatable a sales-tax increase would be if it is linked to a property tax decrease, how to keep cities and counties from raising property taxes if the school property tax goes away and whether to trust schools to plan well for a volatile type of tax.

School districts generally like property taxes because Utah law guarantees districts will receive at least the same property tax revenue each year.

But in lean years, people tend to spend less while shopping, which can lead to revenue shortfalls.

Adams said in times of economic plenty, schools will have more money.

"However, it does require prudent fiscal management," he told the committee.

The bill is currently written to accommodate a total shift from property tax to sales tax, but Adams said he could be open to a partial shift, as well.

The text of his bill, and an accompanying chart can be downloaded from the committee's website, which can be accessed through www.le.utah.gov

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