Legislative leaders appear to be leaning toward giving local school districts more authority to raise property taxes to fund schools.
That's what House Majority Leader Kevin Garn, R-Layton, indicated in a Funding of Public Education Task Force meeting Monday. Garn is co-chairman of the task force.
But superintendents say the public hates the property tax and doesn't always approve increases. The Utah Education Association urged the task force not to close the door on other tax options.
The task force was established by the 2000 Legislature to examine and make recommendations on a series of issues, including alternative revenue sources and a plan to boost school funding. A report and any proposed legislation must be presented by Nov. 30.
Utah faces a unique dilemma. Data show Utah taxpayers carry a heavy burden in terms of personal income going toward schools, yet the state spends the least per student in the country. Much of the discrepancy is attributed to demographics: About one-fourth of Utah's population is school-aged.
Every cent of state income taxes goes to public or higher education. Other taxes also fund schools, including property taxes levied by school districts.
But Garn said the state doesn't have much room left to levy taxes.
"It's going to be virtually impossible for the Legislature to raise taxes," he said. "It appears now we're at capacity."
Added co-chairman and upcoming Senate President Lyle Hillyard, R-Logan: "If we think the whole problem (of education funding) is going to be solved by the Legislature (raising taxes), that's not going to happen."
The Legislature has granted tax breaks before now, however. And that has resulted in losses in potential school revenues in the neighborhood of $282 million per year at least from 1992 to 1998, according to a 1998 State Office of Education presentation. Income tax rates have not changed since, though the state is receiving more money due to growth.
Even so, Utah's household taxes — property, sales and income taxes — in 1998 were the highest among seven Western states studied by Doug Macdonald, chief economist with the Utah State Tax Commission.
"If you're a doctor, it's like we already have a temperature of 99 or 102," Macdonald said Monday. "I don't think it's advisable to ratchet that up unless there's some sort of crisis."
But UEA executive director Susan Kuziak believes crisis is imminent.
"I know, as a political matter, how hard it is for you (to increase taxes) in an election year. But unless we think to the future, the system will implode," Kuziak said. "Please don't start to think the only option we have is property tax."
While Macdonald's research shows household taxes are high, property tax rates are in step with other Western states.
Business taxes also have room to increase. The corporate tax is $82 million a year lower than the average rate and base in the West, Macdonald's research shows.
While the task force will study corporate franchise taxes in the coming weeks, Garn said, "we will probably not raise taxes on corporations.
"They're the engine of the economic prosperity that we've had," he said after the meeting. "If we put additional taxes on our corporate businesses, we're going to have a tough time attracting businesses to the state and that will have an economic impact on business here."
But Garn sees elbow room in the property tax. He noted no local school district has hit the legal maximum in property tax assessments, but Davis Superintendent Darrell White says his district could hit the voted leeway maximum by next year.
"That is not a tax people like," said Provo Superintendent Michael Jacobsen. "If given the option to vote, that would be a hard one to pass."
The state basic property tax is spread to all school districts. But the rate floats, decreasing as property values increase. Superintendents on a task force panel to discuss funding concerns suggested setting that basic rate to bring in more money for schools as property values rise.
The task force will discuss other potential revenue streams in the coming weeks, Garn said.