Utah lawmakers are — again — trying to reroute education property tax dollars to the state. Gov. Spencer Cox vetoed the idea last year, when he worried it would impact public trust and education funding.
In response, Republican Sen. Lincoln Fillmore, the architect of last year’s version, said he’s made adjustments. But the arguments for and against the proposal largely remain the same. Fillmore said it gives the state needed financial flexibility. Critics in education liken it to money laundering.
What Fillmore’s new bill, SB65, deals with is the State Basic School Levy, as it's often called, that Utahns see on their property tax bills.
The basis of Utah’s public education funding is the Weighted Pupil Unit, which determines how much money school districts get based on enrollment. Lawmakers set it each year. The state requires local districts to impose a basic property tax to raise part of the Weighted Pupil Unit. Almost every district doesn't collect enough on its own, so the state makes up the difference with income tax funds. That way, each district has the same amount relative to enrollment.
Rather than have the money from local property taxes go directly to the district, like it currently does, Fillmore’s proposal would redirect the basic levy to the state. His bill would create a special revenue fund to hold the money, which could be used for “statewide purposes consistent with the General Fund.”
His previous bill would’ve sent the money directly to the General Fund.
The state would then give districts the same amount back, including any interest earned during the lag between when the levy is sent to the state and when districts get it back later.
“I think this represents a financial win for most school districts in the state. It's a win for the state budget,” Fillmore told his colleagues on the Senate floor, Feb. 18. “It allows greater flexibility while still guaranteeing that school districts get the exact same amount of money on the exact time frame, including their potential interest earnings.”
The flexibility comes from increasing the amount of dollars the state has in unrestricted accounts, meaning it could use the funds for anything. To pay districts back, the state could pull from the restricted income tax fund, which is earmarked for education and certain other services by the state constitution. The bill doesn’t dictate where the money has to come from.
The Legislature unsuccessfully tried to get rid of the earmark in 2024. Income tax revenue is growing faster than other state revenue sources.
“As long as we're in a situation where some funds are growing very fast, and others are growing very slow or shrinking, if the restricted fund is growing fast, then that creates a situation where a lot of urgent state needs can go unmet,” Fillmore told the Senate Revenue and Taxation Committee, Jan. 28.
While Fillmore is pitching the idea as a win-win for both the state and school districts, education groups don’t see it that way. The Utah Education Association and the Utah Parent Teacher Association both oppose it, as does a group that represents the Utah School Boards Association, the Utah School Superintendent Association and the Utah Association of School Business Officials. They all opposed Fillmore’s bill last year, as well.
Todd Hauber, business administrator for the Granite School District, called Fillmore’s 2025 bill “washing money.” This year, Hauber told KUER he’s trying to use more delicate words.
“But it is the same concept. You're just taking money from bucket ‘A’, running it through bucket ‘B’ to use it for other purposes,” Hauber said. “That just doesn't feel right generally.”
Like last year, Hauber is still worried about what this means for future education funding.
“So what this does is it takes future revenue increases in income tax, runs it through this process and makes it available for general government purposes,” Hauber said. “We're constraining growth of revenue for public education through this mechanism. And that's a concern. Public education should receive the increased value of additional income tax, and this would just simply take that and divert it into state coffers.”
If the state pays districts back through the income tax fund, Hauber said that’s no small number — this year it’s about $880 million. Hauber said there’s not that kind of money just sitting in the fund, so the state would need to shift things around.
The state’s budget flexibility challenge is real, Hauber said, but he doesn’t think this is the right solution. He sees this as lawmakers circumventing the income tax earmark, which Hauber said is a constitutional question that voters need to weigh in on.
He also worries about transparency if the tax notice tells Utahns they’re paying the property tax to fund public education, but instead it's funding general state needs.
Another change to Fillmore’s bill this year is that it would require property tax notices to say: “The minimum basic tax generates an amount that the district remits to the state. The state remits an equivalent amount of state funds to the school district and any additional state funds to ensure the full cost of the district's basic school program.”
But Hauber said that doesn’t fix the transparency issues.
Fillmore’s bill passed through the Senate 18-11, with some Republicans joining Democrats and the Utah Forward Party in expressing concerns. Now it goes to the House.
