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Senators took a first step Tuesday toward a big statewide property tax hike that is designed to help equalize funding between rich and poor school districts.
SB97 would generate an extra $75 million a year with the first increase in 19 years to a state-ordered property tax rate for equalization, used to help ensure that poor-area schools do not suffer too much compared to rich districts. School districts charge additional local taxes beyond that.
The tax hike would cost a typical family $46.05 a year, and cost the average business $184.17, said Sen. Aaron Osmond, R-South Jordan, sponsor of the bill.
The Senate Revenue and Taxation Committee advanced it on a 3-1 vote, sending it to the full Senate for consideration.
Osmond said school districts in poorer areas often charge high rates in their local share of property taxes but generate relatively little money because of low valuations there. And some rich areas are able to generate big amounts with much lower tax rates.
For example, he said the wealthy Park City School District is able to charge a relatively low property tax rate of .0034 times the taxable value of property, and it brings in $6,737 per student.
That is nearly five times higher than the $1,409 per student raised in the South Sanpete School District by a tax rate that is twice as high .
Adding to inequity, he said, is that the state guarantees that charter schools receive the average amount going to all school districts, currently $1,746 per student.
He notes half the state's school districts receive less than that average amount, and the $75 million increase he seeks would allow all districts to bring receipts up to the same $1,746 that charter schools are given.
The proposal caused a rare split between the Utah Taxpayers Association which opposes it and Sen. Howard Stephenson, R-Draper, who is that group's president in his full-time job. He supports the bill.
"We just feel that a tax increase in a year of surplus is not a proper policy," said Heidi Erickson, research analyst for the group. She suggested smaller increases over time.
Stephenson said his board of directors let him vote his conscience and in the interest of his constituents, so he supports the bill because it would treat schools in his Senate district more fairly.
"Inequity will begin to go away with this bill," he said.
Senate President Wayne Niederhauser, R-Sandy, said the Legislature seems to talk about the problem every year, but never passes a solution. "I think it's time to do it," he said. "We just need to bite the bullet."
Sen. Deidre Henderson, R-Spanish Fork, chairwoman of the committee, praised the goal of the bill, but voted against it "because of the tax increase."