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Two decades of Utah tax policy has cost public schools $1.2 billion a year, according to a report released Monday by Utah Foundation.

Between 1995 and 2014, the amount of school-supporting taxes Utahns paid for each $1,000 of personal income fell from $39 to $28, the report states.

And while lawmakers have added hundreds of millions of dollars to the education budget in recent years, Utah Foundation research director Shawn Teigen said, those increases have left relatively little for school investment after being absorbed by inflation and enrollment growth.

"Those big increases, on average, have been basically whittled away to about $22 million per year in new funding," Teigen said. "We're definitely not saying it's nothing. It's just not quite the grand push toward education funding as maybe it looks like on the surface."

Utah Foundation researchers looked at several changes to Utah's tax code — including the Truth in Taxation process and a 1996 constitutional amendment that allowed income tax revenue to be diverted from K-12 schools to support higher education — and the effect those changes had on reducing the flow of funds to classrooms.

Utah's funding effort — the share of personal income used to support public schools — was ranked seventh in the nation in the mid-1990s. It has since dropped to 37th.

"Utah's K-12 funding effort has stagnated compared to the rest of the nation," Teigen said in a prepared statement.

If the state had maintained its funding effort of $39 for every $1,000 of personal income, he said, per-student funding would also be $2,000 higher. Utah schools are currently the lowest-funded in the nation on a per-student basis.

The report also states that income tax cuts over the past 20 years have cost schools $350 million each year, and the pressure from Truth in Taxation has reduced annual funding by roughly $600 million.

Enacted in 1985, Truth in Taxation requires property taxes to remain revenue-neutral by automatically decreasing tax rates as property values increase.

That means taxing entities must actively raise taxes to capture inflation, Teigen said, rather than passively benefiting from increased value.

State education funding is supplemented at the local level by property taxes, which are levied by district-school boards.

"It's hard to put a dollar amount on Truth in Taxation," Teigen said. "It is all about holding revenue neutral over time, and the effect of that is a decreasing percentage for the property tax."

Billy Hesterman, vice president of the Utah Taxpayers Association, said the law successfully forces school boards and other taxing entities to be transparent about public funding.

If a school board or city falls behind on inflation, he said, it is because leaders were unwilling to face the public.

"It just requires having the meeting and having that conversation with taxpayers," Hesterman said.

Schools need to be equipped to serve students, Hesterman said, but conversations about funding should not ignore the many successes occurring within Utah's education system.

"We need to be careful about how loud we're sounding that alarm," he said, "and make sure everything is being taken in perspective."

Utah's public schools are forecast to grow by 10,000 students next year, which requires roughly $115 million in additional spending to maintain current funding levels.

In an interview last week, Utah Gov. Gary Herbert said there is a need for a renewed emphasis on public education in the state.

With more cooperation and less infighting, he said, Utah could achieve the best education system in the nation.

"It's not going to be easy," he said, "but I do believe it's doable."

He said he was reluctant to do too much "tweaking" of the tax code, which has helped the state's economy grow. But he added there are mechanisms beyond an income tax increase to boost school funding.

The recent gasoline-tax increase, he said, relieved pressure on the state's General Fund, which in turn could reduce the amount of income tax revenue used to support colleges and universities.

Schools could further benefit from the collection of roughly $200 million in taxes from internet sales, he said.

"You wouldn't have to raise any kind of tax," he said. "It's just escaped taxes that are owed and uncollected."

Various efforts to increase school funding, through tax increases or by limiting tax exemptions, have been discussed and defeated at the Legislature.

The advocacy group Education First has recently proposed raising income taxes by seven-eighths of 1 percent, which would generate roughly $500 million each year for Utah schools.

Hesterman said those decisions should not be made lightly.

"Raising taxes should be hard," he said. "We want to make sure the money being taken is spent in the best way possible."

Twitter: @bjaminwood

— Tribune reporter Robert Gehrke contributed to this article