This is the time of year when cities and school districts across the state set their budgets and propose property tax rates for the coming year. (Counties and most special taxing districts go through the same process in November and December.) Your Taxpayers Association is always vigilant to warn taxpayers when local governing bodies are proposing property tax hikes.
The Utah Taxpayers Association is currently aware of 13 cities, 14 school districts and 2 special districts proposing property tax hikes this year. Utah’s Truth-in-Taxation law requires reductions in the certified tax rate to offset higher valuations on existing properties. This keeps an entity’s budget revenue neutral and protects taxpayers from arbitrary tax increases.
Five school districts proposing tax hikes this year are not being completely honest about the need for a property tax increase: Salt Lake, Granite, Murray, Carbon and Grand. These five districts claim that the legislature is responsible for the need for higher taxes because of the way public charter schools in Utah receive funding.
Under Utah law, when a student transfers from a district school to a charter school, the school district is required to send 25% of the local property tax revenues it receives for that student to the charter school. This is called local replacement funding. Unfortunately, due to a drafting error, 26 of Utah’s 41 school districts have been keeping more than 75% of the local property tax revenues for students attending charter schools. The worst case is in Piute, which has kept 96% (or $7,615) of local property taxes that had funded the student who left for a charter school.
The passage of H.B. 119 during the 2015 legislative session corrected this error and establishes the same standard for all of Utah’s school districts when it comes to transferring property tax revenues for charter students.
Now Salt Lake, Granite, Murray, Carbon and Grand school districts are proposing to raise property taxes to cover the 25% they are required to send with charter students, essentially double charging taxpayers. This is despicable. Just because some school districts had been incorrectly keeping higher revenues for charter students does not justify a tax hike on property owners now that the windfall has been removed. Nevertheless, Salt Lake, Granite, Murray, Carbon and Grand school districts are trying to get away with just that – in their minds, the windfall has become an entitlement.
Murray School District
In the 2013-14 school year, Murray School District enjoyed spending a whopping $2,523 more per student than the statewide average. At the same time, according to the Legislative Fiscal Analyst, Murray has also benefited from the drafting error windfall to the tune of $28,455. But the Murray school board has proposed to increase property taxes by $605,000 this year, of which $115,000 will be used to replace loss of the windfall and cover the entire 25% of local replacement funding per charter student. This means that the district is keeping 100% of the property tax revenues for students that don’t even attend district schools and forcing taxpayers to foot the bill.
Grand School District
Grand School District spends $1,614 per student more than the state average and has previously received from the drafting error a windfall of $45,656. But again, the school board wants to recoup $87,000 for local replacement funding – enough to cover the entire 25% going to charter students, increasing taxpayers’ burden so that the district can enjoy larger revenues.
Salt Lake School District
The Salt Lake School District spends $795 more per student than the state average and has been receiving $525,273 from the drafting error. The school board, however, is proposing to hike taxes by $900,000 to make up the lost windfall and cover the full cost of local replacement funding. Another $600,000 for peer assistance and review and teacher development equals a total tax hike of $1.5 million.
Granite School District
Granite doesn’t spend more than the state average per student, but has received $399,983 from the drafting error. The Granite School Board has proposed to increase taxes by over $3.8 million this year, $860,000 of which will be used to recoup the loss of the windfall and again, cover the full 25%. Granite especially should not be increasing taxes this year. Under SB 97, the school equalization legislation that passed in the 2015 session, the district will be receiving ongoing new revenue of $1.18 million. The district has indicated that the revenue increase under SB 97 and the WPU increase will all be used for employee compensation and benefits.
Carbon School District
Prior to the passage of HB 119, Carbon School District had been receiving $180,830 from the drafting error. Now the district is proposing a $187,000 property tax hike, all of which will be used to cover LRF.
The five school boards that are proposing tax hikes this year to maintain cushy revenue sources for phantom students need to hear from taxpayers when Truth-in-Taxation hearings are held in August. These school districts are double-charging taxpayers when a district student decides to attend a charter school. This was not the intent of the legislature and is completely unjustifiable.
It is crucial that as your Taxpayers Association continues to weigh in with each of the four school boards, you also add your voice calling on these school boards to refrain from unnecessarily raising your property taxes.
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