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Will lawmakers consider another tax increase for education?

Published: Monday, Feb. 1 2016 6:55 p.m. MST

Business leaders are asking lawmakers to consider an increase to the income tax rate to raise money for education by asking voters whether they'd support such a move.

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SALT LAKE CITY — Education advocates in Utah's business community have added another rung to their proposed ladder for raising student achievement and improving long-term outcomes in public schools.

This time, it's in the form of a tax increase.

Education First, a coalition of Utah business executives, is asking lawmakers to consider an increase to the state income tax rate that would bring in an estimated $518.5 million in new money for education.

But the proposal would first go before voters, who would indicate during the November election whether they would support raising the income tax from 5 percent to 5.875 percent, an increase of seven-eighths of 1 percent. Then the Legislature would decide next year whether to pass an increase.

"We're not asking for an out-and-out appropriation. We're asking the Legislature to allow the public to voice their opinion as to whether to increase the income tax by this amount," said Education First co-chairman Richard Kendell, a former commissioner of the Utah System of Higher Education.

Kendell said it's still unclear just how big an increase individual families could expect, but estimates will be included as the legislation is drafted.

Utah's $3.5 billion education fund is made up of revenue from state income tax. And while the fund currently serves both K-12 schools and higher education, the proposal from Education First would earmark the new money entirely for K-12 schools.

Sixty percent of the new revenue — $307 million — would be spent on students from preschool to sixth grade, emphasizing reading and other early learning skills. Grades seven to nine would receive 20 percent — $102.3 million — to put toward reading skills, as well as enhancement of science, technology, engineering and math opportunities. The remaining 20 percent would go to high schools, targeted at boosting college preparation and dropout prevention.

The proposal adds to other funding requests that Education First and Prosperity 2020 outlined late last year, identifying preschool and extended-day kindergarten for low-income children, as well as skills enhancement for teachers, as key focus areas for this year.

Kendell said the initiative to ask voters whether they'd support a tax increase for education has gained signatures of support from 80 business leaders in Utah, including 21 chambers of commerce.

"This proposal is not coming from the education community. This is not a result of educators getting together and making a plea for money. This is coming from the businesspeople from the state," he said. "It's very specific, and it's all aimed at improving academic achievement outcomes that will be good for kids, families, and in the end, a really good initiative for Utah."

But neither a bill nor sponsors has yet emerged to advance the request. Kendell said he hopes a sponsor will come forward and a bill will be numbered by the end of next week.

The advocacy group first introduced the idea to lawmakers Friday, and it's unclear still what kind of action lawmakers will take, if any. Last year, the Legislature considered a bill that originally sought to increase the income tax by 1 percent. But even after that was cut down to a 0.5 percent increase, the bill failed to win committee approval.

However, several polls last year indicated most Utahns support a tax increase as long as the money went to schools.

Legislative leadership said Monday that the proposal would help start a discussion on how to bring more money into the classroom. And input from voters would inform that discussion.

"It's an ambitious concept. It's going to take a lot of discussion, and this early in the session, I wouldn't want to prejudice that either way. But it's an important discussion to have," said House Speaker Greg Hughes, R-Draper. "I think it's an interesting approach where it's a nonbinding resolution. It's looking to kind of get the pulse of the people."

Senate President Wayne Niederhauser, R-Sandy, said it's a "valid question" to pose to voters. But raising the income tax at a time when other states are lowering or eliminating their income tax could put a dampener on productivity, he said.

"It puts us in a much worse position in competing with states for jobs and economic development when we're raising our income tax at the same time everybody's lowering their rate," Niederhauser said.

An alternate approach would be to reduce the number of tax deductions or credits, allowing the state to generate more revenue on a broader base with the same or even a lower tax rate, according to Niederhauser.

"I actually feel like that's a better proposal," he said. "I hope that's something that could be addressed."

State education leaders have not taken an official position on the request from business leaders. But David Crandall, chairman of the Utah State Board of Education, said he hopes the initiative to ask voters will be an easier way for lawmakers to consider raising the tax rate to benefit schools.

"It's a pretty significant tax increase, so I think it would be a way to provide both a political cover for lawmakers and an opportunity for the voters in general to be heard on the topic," Crandall said.

Members of the State School Board will likely give further input on the initiative during their monthly meeting Friday, he said.

Contributing: Lisa Riley Roche

Email: mjacobsen@deseretnews.com

Twitter: MorganEJacobsen

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