Initiative calling for tax hike to fund schools has lawmakers’ attention


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Lawmakers made it clear Monday they’re paying attention to a proposed citizen’s initiative that would bring in an additional $750 million for public schools by raising state income tax rates.

“This is a very difficult situation for the Legislature just because of the politics,” Senate President Wayne Niederhauser, R-Sandy, said during a presentation to the Utah Taxpayers Association’s annual pre-legislative session conference.

But Niederhauser said even though lawmakers don’t like raising taxes, he wouldn’t argue against finding additional revenue for schools, as long as it’s clear it will improve educational outcomes.

Backers of the Our Schools Now initiative that would raise the 5 percent state income tax rate by seven-eighths of 1 percent told the Deseret News and KSL editorial boards Monday they’d prefer that the Legislature deal with the funding issue.

“We’d love to have them trump us. But it’s got to be real, and it’s got to be significant,” said Nolan Karras, a member of the initiative group’s steering committee and a former chairman of the state board of regents.

Karras, who also served as Utah House speaker during his time in the Legislature, said the group has been asked to meet with legislative leaders Thursday.

“We intend to go down there and listen, but we have no reason to bid, like, ‘Oh, if you put up $350 million, we’ll go away,'” he said. “We just would like to see what they do” during the 2017 legislative session that starts Jan. 23.

The initiative, which would appropriate money raised through the tax increase to public schools and require annual academic improvement to receive full funding, is being proposed for the 2018 general election ballot.

The yet-to-be drafted initiative won’t be filed with the state until next summer, and voter signatures would start being gathered in the fall. If enough Utahns sign the petition for a spot on the ballot, the initiative would go before voters.

Utah Jazz owner Gail Miller, co-chairwoman of the group, told the editorial boards that the business community is behind the initiative because the Legislature hasn’t been as interested in the funding issue as it should be.

“We don’t feel there is anything more important that we can do than provide a high-quality education,” Miller said. “We’ve done a lot with very little, but we feel like we’ve been treading water for a while, and we need to add to the coffers.”

Niederhauser said his personal view is that “potentially, we do need some more revenue for education,” but raising the state’s income tax rate is “absolutely the worst thing we can do.”

The rate was lowered from a maximum of 7 percent in 2007 as part of a $220 million tax cut package to help make Utah more competitive with neighboring states in attracting new jobs.

The Senate president said lawmakers could look instead to another increase in the gas tax because road use is still subsidized by almost a half-billion dollars despite a nearly 5-cent increase in the per-gallon rate this year.

Another source, Niederhauser said, could be restoring the state sales tax on food. He said the reduction was “probably a mistake” because the lower-income residents it was intended to benefit have since been hurt by cuts to social service programs during a budget downturn.

Collecting more of the sales taxes already owned by Utahns on online purchases from out-of-state companies is also a way to raise more revenue, Niederhauser and others at the morning-long conference said.

House Speaker Greg Hughes, R-Draper, told the conference he would be “cautious against raising the income tax, or at least being myopic about it. We’d better be very broad in terms of our considerations.”

Hughes said he expects the debate over whether to allow the use of medical marijuana in the state to be the biggest issue of the upcoming session.

An initiative on medical cannabis has been talked about for the 2018 ballot.

Both House and Senate Republicans will be asked at daylong closed caucus meetings to support an education funding task force to look at ways to raise more money for schools tied to performance, said Sen. Howard Stephenson, R-Draper.

Stephenson said lawmakers have to take the proposed initiative seriously but questioned whether it could win approval despite polls showing support for a tax increase for schools.

“Nobody wants to admit voting against schools,” Stephenson said, noting Utahns voluntarily contributed just over $8,000 in 2014 on their state income tax forms to public education.

Rich Kendell, a former Utah commissioner of higher education, cited a number of statistics at the conference showing what he called “troubling results” from Utah’s schools, including a C-minus grade from Education Week last December.

He said Utah continues to rank last in per-pupil spending, down 12 percent since 2008.

“Our economy is going to be driven by talent. That is the new economy,” Kendell said at the conference, warning that a mediocre school system only allows Utah “to muddle along.”

In presenting his budget last month, Gov. Gary Herbert again made education a focus, with 79 percent of new ongoing revenue available set aside for education — $260 million for public schools and higher education.

The governor’s proposal covers the 10,100 additional K-12 students anticipated and a 4 percent increase in the mechanism for funding schools, the weighted pupil unit.

Herbert’s budget also calls for the creation of a task force made up of business and education leaders charged with promoting “an equitable and simple tax system” by aligning taxes “with the modern economy,” not just a rate increase.

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