Flagged Bill: SB 118 – School Funding Through Income Tax Revisions, Sen. Jones

Sen. Pat Jones (D)
Senator Pat Jones (Democrat – Salt Lake City)

***Note: this bill has been substituted, this analysis may no longer be valid***

Utah often says that it promotes the family, and one of the way it shows this is through various policy decisions that are specifically designed to encourage the growth of the family. One of the most obvious examples of such a policy is the tax deduction for children. One area, however, where Utah appears to lack in fulfilling its commitment to family and family values is public education – ranking dead least in per-pupil spending across the nation, a situation that has persisted for years.

Senator Pat Jones (Democrat – Salt Lake City) is proposing that Utah change its policy towards the dependent deduction in order to specifically beef up education funding.

Generally speaking, Utah’s deduction for a child is $750 a year. This calculation is 75 percent of the federal deduction rate for a child and this percentage is set into state law. Through SB 118 – School Funding Through Income Tax Revisions, Jones is proposing a wind down in the dependent deduction over the next five years with the funds being placed directly into education.

If passed, SB 118 would reduce the percentage tax payers are able to deduct from 75 percent to 60 percent in 2014, resulting in a reduction in the deduction of $150. Over the next four years, the deduction continues to wind down by 15 percent year after year until, in 2018, the deduction for a child is completely removed from state code.

On the other side of the equation, Jones proposes that the money received by reducing and then eliminating this tax credit be directly placed in the education fund, being divided between standard public schools, private schools, and schools for the deaf and blind. 10 percent of funds received would be distributed evenly among all school districts across the state with the other 90 being distributed per pupil.

This would truly be a revolutionary and dramatic change to education funding in the state, and would have a real impact on family budgets as well. It is estimated that the number of children in Utah is nearly 880,000, and the state estimates that nearly $160 million will be added to the budget in just the first round of tax deductions. However, with an average of roughly two children per household, this policy also means that the average family will lose $1,500 annually in tax deductions come 2018.

This type of legislation would mark a massive sea-change in education funding if it were to pass. But, perhaps, desperate times call for desperate measures. Utah ranks in the bottom third of high school graduation rates in the country, below average for teacher salary, the second highest number of students per classroom, and the second lowest for per-pupil spending. To make matters worse, the mantra that Utah has been doing more with less is starting to prove untrue as test scores have been slowly but surely been ticking down over the past decade.

One thing is clear, Utah can not claim it is a pro-family state when it continually falls short on education performance. It is also clear that under-educated children turn into under-educated employees, and under-educated employees bring less money to households and the state. It is also clear that money isn’t the only answer to fixing Utah’s education problems and that $1,500 is a lot of money for a family to no longer receive as part of an annual benefit – and $1,500 only assumes two children in a household, it is not unusual to see families with 3, 4, 5, or more children under the roof. This reduction could have a dramatic effect on family budgets.

Ultimately, however, those with children are the ones who are directly benefiting from a strong public education system. Though the initial sticker shock may be difficult for families to swallow, as budgets adjust, the benefits of a higher quality education system are long lasting.

For lawmakers to pass such legislation will require quite a bit of courage as they explain their vote to their constituents. Jones, for her part, has decided that she will not be running for reelection in November – for her, it is clear that she is interested in forcing the debate on public education funding. It is near certain that this legislation will not pass, but by putting people on the record, Jones is holding lawmaker’s feet to the fire.

To contact Senator Jones, click here or call 801-278-7667.

Impact on Average Utahn:

High Impact   5 . 4 . 3 . 2 . 1 . 0   No Impact

Need for Legislation:

Necessary   5 . 4 . 3 . 2 . 1 . 0   Unnecessary

Lemon Score:

Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker

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4 Replies to “Flagged Bill: SB 118 – School Funding Through Income Tax Revisions, Sen. Jones

  1. You’re giving away your Democratic bias, here. This isn’t good policy, and your analysis is flawed.

    Pff. Not dramatic. Just bad policy. That’s all…unless you want to encourage Utahns to have fewer kids and put the burden of society back on the very people who are creating the next labor force and bearing the costs of that labor force: parents.

    If we’re going to do this, are we going to ask back all of the tax credits that non-payers parents’ got while they were growing up? Are we going to charge every service user for use of the service?

    This seems like a very un-Democratic way to fund education, actually. Taking from the have-nots to give to the…teachers?


  2. I have a couple of issues with this revenue mechanism and think that it is the wrong method and the wrong message.

    1. This change is likely a net regressive change to the tax code. People who have children, assuming that their individual consumption is held constant pay higher sales tax from children’s consumption and likely property tax because more people generally equals more space holding all other property values constant. Both of these taxes have a tendency to be regressive already. Additionally, since this is a fixed $ tax benefit it will effect low income Utahns much more than high income. Utah doesn’t need a more regressive tax system, we need a more progressive tax system.

    2. The very premise of the bill is that education should be paid for by the users of the system and not the overall tax base. This is a bad assumption for making policy. The long lasting benefit of quality education that you cite is a benefit that is shared across society. It is a benefit to retirees who’s benefits are paid for by current workers. It is a benefit to the employer who doesn’t have to pay for basic English and math training for their employees, and it is benefit for society to have voters with some understanding of the issues.

    We all know that Utah education needs more funding but the changes to the funding should be non-regressive and broad based. Getting rid of the Huntsman flat tax and revenue neutral adjustments of property tax would be a much better strategy.

  3. I believe the concept that a users of a public service be the ones is a good one. This measure would be more palatable if the property taxes paid by property owners be reduced by the amount of and eliminate that portion of the property tax assessment. That would give this measure a better chance of passing the legislature. The act would then make the users of the education service responsible for the financing of it during the portion of time that they are using it. I never did believe it fair for property owners to have to fund education. It feels to me to be a tax without representation; non users taxed to pay! I would be interested in a study indicating the financial impact on my proposal before considering any changes to our current system. In general I do not believe any tax that supports a service unrelated to the taxpayer is fair and equitable. The idea Senator Jones is proposing is a step in the right direction.

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