Lawmakers Pushing Back Against Income Tax Hike Proposal to Fund Schools

Utah State CapitolWhat do state legislators do well?

Study stuff.

And Sen. Howard Stephenson and Rep. Steve Eliason announced in a pre-legislative conference Monday that they want to form a special education funding task force in the 2017 Legislature, now just a few weeks away.

Stephenson, R-Draper, and Dr. Richard Kendell, who is a leader in the Our Schools Now citizen initiative petition group, debated the proposed OSN 7/8th of 1 percent increase in the state income tax rate for public schools.

Speaking at the annual Utah Taxpayer Association conference, held in the Little America Hotel, Stephenson, and the new Senate co-chairman of the public education budget committee, Sen. Lyle Hillyard, R-Logan, said increasing the income rate is the wrong way to go, at least for now.

But Kendell said his group is ready to push for the tax hike – aimed at being on the ballot in 2018 – with any number of statistics that show Utah school children are falling behind, not getting ahead.

Stephenson said he has stayed awake at night worrying that the OSN tax hike will fail at the polls – an odd thing for the president of the taxpayers association to say.

But Stephenson said a failure at the polls – and he strongly believes it would fail – would lead Utah into a “moral” anti-teacher/public education crisis, one that politically the state wouldn’t come out of for years to come.

Kendell pointed out that six-to-eight recent polls showed around two-thirds support for the personal income tax increase – assuming the new $750 million revenue would go to local schools. (Several of those polls are from UPD’s pollster Dan Jones & Associates surveys.)

But Stephenson said he’s become convinced that recent polling, from President-elect Donald Trump to Brexit, turned out to be wrong because people surveyed just don’t want to admit to what is considered shameful opinions.

Kendell and Stephenson went on the argue over a whole slew of “statistics” – how well Utah kids are doing in a variety of testing, how Utah ranks in many “rankings”, from per-student spending to math, English and other subjects.

If the GOP-controlled Legislature – even after the upcoming task force – rejects the 7/8th increase, how can $750 million more or so be found each year?

Stephenson went on to list a number:

  • More than $800 million in property taxing authority now resides in “headroom” among the 41 independent school districts, overseen by elected citizen board members.

    If local boards and/or district voters won’t raise their own property taxes – the government closest to the people – why should the Legislature take on that burden?

  • $200 million or more in now-owed, but uncollected, state and local sales taxes on internet retail sales.
  • The federal government owned lands, which do not pay property taxes, strap school funding unfairly. Upwards of 70 percent of Utah lands are held by the federal government.
  • Around $800 million that each year comes in income taxes, but goes to Utah’s public post-high school industrial training programs and universities.

“We could claw that back,” said Stephenson, and those monies could go to K-12 schools. (Yes, there would have to be some other way to run the universities and applied technology operations.)

It was clear, said House Speaker Greg Hughes, R-Draper, that the OSN issue and public education funding would be the major issue in the upcoming 45-day session.

Lawmakers can’t ignore it, he added.

And Hillyard and Stephenson said the dozens of “blue ribbon” folks behind OSN – many of them wealthy and business and politically-savvy – are formidable opponents.

“We can’t afford the risk” of the OSN citizen initiative failing at the polls, said Stephenson – who actually opposes it.

Something must be done to help public school funding, he added. But it should be done by the Legislature, not citizens at the polls.

The task force, Stephenson said, should come out with a funding plan, local control guidelines and reforming other specific education revenue streams, which could include reducing child deductions on the current state income tax.

Lawmakers have the time and will to tweak tax laws and school funding, said Hillyard.  He added any citizen-passed initiative is extremely hard to change politically by the Legislature.

And so a huge tax hike, like what OSN proposes, could end up just being blended into general school funding, and that is no way to make the targeted, local-school-based education changes that need to come.

Kendell says OSN will succeed, despite Stephenson’s prediction that polls are wrong on the subject. And that study after study shows that getting more money into revenue-poor schools does indeed make a real difference in education performance.

What will Utah’s economy and education look like 10 years from now? asked Kendell.

“We will be unprepared to succeed. (Utah’s) education system that 50 years ago was among the best, is now one of the last” among the industrialized nations.

“We won’t even come close” to the achieving economies like several of the best hi-tech regions of North Carolina, California, New York and San Antonio.