SALT LAKE CITY — Backers of Our Schools Now, the initiative to increase income and sales taxes to raise $700 million for education, told lawmakers Monday they'd drop the measure if voters are able to weigh in on a 10-cent per gallon gas tax hike.
The proposal pitched to closed House and Senate caucuses calls for the Legislature to approve a question for the 2018 general election ballot asking whether voters would support raising the state's gas tax by 10 cents a gallon.
The gas tax increase, which would raise $140 million if approved by the 2019 Legislature, would be on top of another element sought by Our Schools Now, a property tax freeze that ultimately would collect $350 million annually for schools.
"That's the proposal we have from them," Senate Majority Whip Stuart Adams, R-Layton, told the Deseret News. "It's hard to know where the Legislature is going to be."
Adams said the proposal "is one I actually like. And I think it has some merit to it."
He said the Senate caucus was not asked to take a position Monday.
"My colleagues are thinking about it," he said. "I'm sure we'll have more discussion later."
Lawmakers would not be bound by the results of the ballot questions on a gas increase, Adams said. He said Our Schools Now agreed to drop the initiative raising both sales and income tax rates by 0.45 percent and get behind the gas tax hike.
The campaign manager for Our Schools Now, Austin Cox, said in a statement issued late Monday afternoon that from the beginning, the group "has preferred a legislative solution to significantly increase funding for Utah students and teachers."
He confirmed the group is "engaged in discussions with the Legislature to increase our commitment to education without a citizen petition. We are encouraged by the support we’ve seen to significantly increase school funding, and look forward to building support in the Legislature."
The components being discussed, he said, "include freezing property tax rates, a 10-cent gas tax ballot referendum and additional funding provided through strong economic growth."
Cox acknowledged it's late in the session for lawmakers to approve a ballot question.
But he said Our Schools now has collected more than 150,000 signatures from Utah voters and "are confident this will be a very good year for public education in Utah and hope to do so with the support of the governor, the House and the Senate."
Rep. Mike Schultz, R-Hooper, the House Budget Committee vice chairman, said there were "multiple things on the table" in discussions between legislative leaders and Our Schools Now.
While Schultz said he believes there will be support for the property tax freeze, whether a deal can be made to provide enough money for education to end the initiative petition drive by Our Schools Now remains to be seen.
"If we can't solve it, it just goes to the ballot," he said. "There is still a gap there."
House Majority Leader Brad Wilson, R-Kaysville, said after House Republicans heard the proposal in their caucus he understood "someone is drafting language but I'm not sure of the status."
Earlier this session, Schultz introduced a bill, HB299, that would cut the amount of the increase in the Our School Now initiative should it pass. He said that helped drive talks with the group.
"My biggest thing is I wanted the public to know we have increased education spending by 20 percent over the last three years — $830 million," he said.
Schultz said he has "a hard time" with the tax increases in the initiative.
"That's a huge tax increase" that hits lower- and middle-income Utahns, he said.
Schultz said he agrees "there should be more money going into education. There's just other ways to do it."
Gov. Gary Herbert's deputy chief of staff, Paul Edwards, said in a statement the governor's office is pleased to see the discussions and hopeful they will succeed.
"We are encouraged that this funding would follow sound tax policy by relying more on broad-based user fees than on hiking tax rates for a shrinking base," Edwards said.
He also said the governor's office likes the idea of letting voters have a say. "Because of our concern about enhancing the educational opportunities for our children, we are hopeful that these negotiations will bear fruit," Edwards said.
Utah Education Association leaders circulated an email saying, "Ideally, our UEA members would first be hearing of this possible compromise via our UEA and not the media," and announced a conference call Monday afternoon.
Legislative leaders have said repeatedly throughout the 45-day session that ends at midnight Thursday they wanted to boost spending on schools and have $581 million in revenue growth and budget surplus funds available.
House Speaker Greg Hughes, R-Draper, said midsession that putting a "record" amount of new money into the state's education system was a priority, along with a tax cut.
That cut will likely include reducing the state's 5 percent income tax rate to 4.95 percent and giving a corporate tax break through establishing a new single sales factor formula that could add up to $28 million.
The property tax freeze is part of the leadership tax package.
Finding new revenues for transportation is also on the table this session. Only about half of the state money spent on roads comes from gas taxes. The rest, about $600 million, comes from the general fund, money that could go to schools.
A bill allowing for electronic tolls on all state roads has already passed, and a bill from the Legislature's Transportation Governance and Funding Task Force would boost some vehicle registration fees.
Our Schools Now is backed by Utah Jazz owner Gail Miller and a number of other high-profile business and community leaders.
The group is circulating petitions for voter signatures to qualify for the general election ballot in November. They need 113,000 voters to sign in 26 of Utah's 29 state Senate districts.
Contributing: Dennis Romboy