Senate gives preliminary approval to school funding equalization bill

Published: Thursday, Feb. 27 2014 7:34 p.m. MST

The Utah Senate gave a first vote of approval to a bill that would raise new revenue for schools by freezing the basic property tax rate.

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SALT LAKE CITY — A bill that would generate new tax revenue for schools and address funding inequities between school districts earned a rare nod of approval from the Utah Senate on Thursday.

SB111, sponsored by Rep. Aaron Osmond, R-South Jordan, would freeze the basic property tax rate, allowing the state to capture new revenue as property values increase. Those funds — which the bill caps at $100 million before returning to a fluctuating, revenue-neutral rate — would then be distributed back to schools at the local level on a per-student basis.

Funding equalization has been a pet project of Osmond's for the past several years. The issue, he says, is that arbitrary district boundaries have resulted in some districts collecting less local tax revenue despite placing a higher tax burden on residents.

"I am surprised that we have not seen this funding disparity, this inequity, challenged in court," Osmond said.

Osmond sponsored a bill last year to address inequity that was criticized as a "Robin Hood" bill for pulling funding away from affluent areas such as Park City to fund schools in more cash-strapped districts.

With SB111, increasing property values will generate new revenues for distribution, meaning no district would gain at the direct expense of others.

"That means that there will be winners and losers, but we’ll be talking about new funding," Osmond said.

The Utah Legislature traditionally has been averse to proposals that generate revenue through new or increased taxes. But Osmond has emphasized that SB111 would not raise tax rates, but rather stop the state's basic rate from automatically adjusting down to remain revenue neutral.

He estimated that within four or five years, revenue from the frozen tax rate will reach the cap established in the bill, meaning $100 million that did not exist before in annual revenue for schools.

Sen. Jim Dabakis, D-Salt Lake City, said the technical nature of the bill "gave (him) such headaches." Dabakis said he was conflicted about a bill that rewards some districts more than others, but he ultimately supported it as a realistic approach to address a funding problem.

"I do think that this means some districts are going to be giving money to other districts over the long run," Dabakis said.

Todd Hauber, business administrator for the Park City School District, said school officials are aware the district is frequently categorized as Utah's rich district. But he said administrators work openly with members of their community to determine priorities and make decisions regarding programs and funding.

"We're very conscientious of imposing taxes and acknowledge the fact that there are wealthy property owners here," Hauber said. "We don't take advantage of that. We don't say there are unlimited resources."

Unlike prior talks of equalization, which would have potentially asked Park City residents to foot the bill for other parts of the state, he said, Osmond's bill calls for an incremental change that accumulates new revenue over time.

But Hauber said any new revenue captured by freezing the basic rate would be managed at the state level and could potentially make it challenging for local school boards to seek increases in property tax funding in the future.

"The taxing capacity of the district is constrained because that portion of revenue is going into the statewide pool instead of our local board working with the community," he said.

The Park City Board of Education does not take a formal position on bills, Hauber said, and board members have not taken any action related to the proposal.

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