SB81 would freeze a state property tax rate known as the basic rate that normally decreases as property values rise. That would mean more money collected by the state, and then equally distributed to schools, as property values rose over time. Meanwhile, school districts would be required to lower one of their local property tax rates by the same amount to keep taxpayers from paying more money overall.
School districts would, however, be allowed to hold truth-in-taxation hearings to keep their local property taxes steady if they felt the need.
"Over time, this will, in fact, significantly improve equity of revenue per student," bill sponsor Sen. Aaron Osmond, R-South Jordan, told committee members Wednesday.
Sen. Howard Stephenson, R-Draper, who has been pushing for equalization measures for years, also applauded the approach. He said the current system is unfair because it leads to a district like Park City spending more than $10,000 per student while a district like Nebo spends less than $6,000, despite a much higher local property tax rate than Park City.
"This begins to correct that," Stephenson said. "Slowly, over decades, we will see this huge disparity start to close and we will say we as a legislature care as much about kids in Tintic [district] as we do about kids in Park City."
But Sen. Patricia Jones, D-Holladay, said the bill would inevitably lead to most districts having to raise or hold steady their local property taxes to make up for the otherwise automatic decrease in local taxes in the bill.
"I can't imagine a school district being so flush with money they're not going to need to replace those funds," Jones said.
Tim Leffel, representing business administrators and superintendents across the state, noted that the bill would likely mean truth-in-taxation hearings in 25 of the state's 41 school districts next school year. Leffel, who is finance director in the Davis District, said districts shouldn't have to hold truth-in-taxation hearings just to maintain the amount of local taxes they now already collect.
Unless they held hearings to keep their local property tax rates steady, those 25 districts could lose, overall, from $30 in the Wayne District to $162,000 in Park City.
The Senate Education Committee approved the bill 5-1 on Wednesday and it now heads to the Senate floor.