Bills create ‘winners and losers’
February 26, 2008
"This is going to be a difficult week," School Board President Kim Carson said about the last leg of this Legislative session. "Changes are going to come fast and furious. The information you have one day is not what you have the next. They can substitute an entire bill until it doesn’t look anything like what it did before."
Equalization of School Capital
Senate Bill 48, Equalization of School Capital, sponsored by Sen. Dan Eastman (R-Bountiful), is on it’s fourth substitution and is the equalization bill most likely to take effect, having already passed the Senate and, on Monday, passing the House Revenue and Taxation Committee 8-5-1.
The bill requires any county with a split school district to impose a capital outlay levy, whose generated funds would be pooled from districts in that county to build school facilities for the split district.
Another equalization bill, House Bill 383, sponsored by Rep. Aaron Tilton (R-Springville), would use a statewide formula to generate revenue for split districts, but this bill has much less traction in the Legislature having only passed a House committee favorable.
Tilton’s bill would hit Park City School District hard with an estimated increase in property taxes of $62 million. Superintendent Ray Timothy said that while the Legislature is really pushing to get something passed, he doesn’t think House Bill 383 will make it through.
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Timothy explained the Legislature’s immediate need for an equalization bill. "The problem is that the Legislature voted to split school districts, and now they’re trying to find a way to pay for that by trying to shift cost to other areas," he said.
The current form of Eastman’s bill would not affect Park City unless one of the districts in Summit County Park City, South Summit or North Summit split, which Timothy said is unlikely to happen.
The bill will affect districts in Salt Lake County, however, creating "winners and losers," as Carson said, because the county’s Jordan School District split into an east and west side, and the west side is in need of some major funding to help build its new district.
Eastman’s bill could cost Murray district about $1 million, Granite School District $1.3 million and Salt Lake District $1.3 million.
Timothy’s concern lies in the fact that this equalization bill is just a stop-gap measure to help Jordan School District fund it’s west side. "They’ll do this this year," he said, "but I think they’re going to reach out statewide next time." And that would have an effect on Park City.
Public School Funding
Approved by the House Revenue and Taxation Committee in a 7-4 vote on Tuesday, Feb. 19, House Bill 391, sponsored by Rep. Wayne Harper (R-West Jordan), looks to significantly change the way schools are funded by lowering property taxes and supplementing the loss in revenue by adding sales tax into the formula.
"We have a combination of income and property taxes that works well statewide," Park City School District Business Administrator Patty Murphy said. "To bring sales tax into the mix is scary because it’s unstable."
The Public School Funding bill would lower local property taxes by 20 percent and raise sales taxes on non-food items by 1.65 percent. "There are still a lot of questions as to how the sales tax will work," South Summit Business Administrator Zane Woolstenhulme said. "Theoretically, we would collect the same revenue with sales tax as with property."
Woolstenhulme, along with Salt Lake School District Business Administrator Janet Roberts, met with Rep. Mel Brown (R-Coalville) and Harper to go through some issues they have with the bill and to better understand how the bill works.
Understanding the bill is something Timothy believes is quite difficult. "It is so convoluted," he said. "It makes funding of public education really an unknown by shifting and taking so much sales tax and lowering property taxes."
One of the issues that both Woolstenhulme and Timothy brought up was the bill’s provision of combining all of a district’s local property tax levies into one "discretionary levy."
Right now school districts can authorize several property tax levies, like a recreation levy, transportation levy, capital outlay levy, which each collect funds for those specific needs. "They represent separate buckets of money," Woolstenhulme said. "You can’t use recreation money for transportation or for teacher’s salaries, etc."
Harper’s bill would "take away local control for citizens who are willing to tax themselves for additional funding for a specific purpose," Timothy said. Having just one discretionary levy would be "hard to sell to the public," he continued. "It’s like you have a slush fund."
Woolstenhulme also said he worries this could make negotiating teacher’s salaries more difficult because it would make it seem like they had this giant pool of money to take from.
For the residents paying these taxes, Carson said this is another "winners and losers" bill because sales tax tends to hit lower income families harder.
Murphy explained it this way: "Let’s say you’re a mother with two kids, scraping by trying to pay rent, buy food, clothes etc.," she said. "if they raise sales tax, then she’ll have less of her income available after buying the basic necessities."
Carson was also concerned that the benefits of property tax cuts would not be passed on to renters, who are also generally low income.
A ray of hope in this cloudy bill is the fact that there is no Senate sponsor. "If you don’t have a Senate sponsor this late in the game, the bill usually doesn’t go through," Timothy said.
Which is good, he continued, because the bill "puts public education funding on shaky ground."