Senator Osmond - SB 97: Property Tax Equalization

Proposal
Background/Overview
1) The Legislature created this problem when we created our local school districts. We drew
the district boundaries.
2) There is wide disparity between property values, rate, and revenue per student in each
district (with some districts that have a high tax rate and low revenue per student):
a.
b.
c.
d.
e.

South Sanpete (Tax Rate = .00762, Ave Value = $171,510, Rev/ADM = $1,409)
Nebo (Tax Rate = .00773, Ave Value = $200,525, Rev/ADM = $1,499)
Jordan (Tax Rate = .00502, Ave Value = $286,504, Rev/ADM = $1,598)
Rich (Tax Rate = .00348, Ave Value = $1,117,552, Rev/ADM = $5,182)
Park City (Tax Rate = .00340, Ave Value = $2,006,551, Rev/ADM = $6,737)

3) Ironically, we already guarantee Charter Schools Local Replacement Funding of $1,746

per student.
4) Exactly half our regular school districts are below the minimum funding amount
guaranteed to charter schools.
5) This disparity is important when you consider that 40% of education funding comes from
Local Property Taxes.
6) Bottom-line: When you consider the high tax burden on some citizens and low burden on
other citizens, this is inequitable tax policy and inequitable education funding.
7) To bring all local school districts to at least the same funding level as our charter schools
would cost the state: $73,118,783.
8) We can choose to solve this, or eventually the Federal Courts will do it for us (its just a
matter of time):
a. Example: 2014 AZ Court ordered their Legislature to increase funding by $1.6
Billion over the next 5 years to address inequity in Education funding for both Public
and Charter Schools.
9) What do we do? Historical equalization proposals have not worked politically (because
they take existing budgeted revenues from rich districts and give to the poor districts
known as the Robyn Hood Effect).
10)
However, equalization can pass politically if we fund it with new tax dollars
through the state property tax (Minimum Basic Rate), without impacting or taking
from local property tax levies.

SB 97 - Proposal:
a. The State Property Tax Rate (Minimum Basic Rate) has not be adjusted since 1996.
The Rate has been revenue neutral for 16 years (revenue only increased with actual
property growth).
b. Total inflationary buying-power impact to Minimum Basic Rate is:

i. $90,817,645 (Just CPI - not including annual growth).

ii. $126,595,515 (Including CPI & Growth to the base).
c. The Proposal Concepts:
i. Recapture the impact of inflation on our state property tax rate to fund Local
Property Tax Equalization.
ii. Instead of capturing the full impact of inflation above, the bill proposes that
we only recapture an amount sufficient to fully fund equalization or $75
Million.
iii. Dedicate these new funds into a restricted account for on-going
equalization purposes only.
iv. Use these funds to consistently and sufficiently fund the following
existing programs:
1. Voted Leeway Guarantee Program (75% of funds or $55
million)
2. Capital Programs (25% of funds or $20 million):
a. Capital Outlay Foundation Program (Rural Equalization) 20% of
Funds
b. Capital Outlay Enrollment Growth Program (Growth Equalization)
5% of Funds
v. Funding these EXISTING statutory programs reinforces that these programs
do work, but only when they are fully funded.
Thats it. Thanks for reading.
Sen. Aaron Osmond