Under current Utah law, property tax rates drop as property values rise. A new proposal would index school district revenues to the consumer price index. This would allow school districts to passively capture annual property tax hikes based on inflation.
Members of the legislative task force on school reform say the indexing proposal is still in a “conceptual” stage. The plan seeks to rebalance the roles of income and property taxes in Utah education funding. An outline of the education funding plan includes estimates that property tax indexing would grow from $18.6 million in new taxes the first year, to $97.7 million in new taxes in the fifth year.
In a second Special Session, the Utah Legislature passed a bill to cut income taxes and raise sales taxes on many items. However, if the property tax indexing plan becomes law, it could erase any tax cuts put in place.
Officials say if property tax indexing is approved, it could continue in perpetuity, capturing more and more revenue with each passing year. Property tax rates would be automatically adjusted, meaning school boards would not need to vote, and would therefore not be blamed for annual tax increases.
Proponents say the negotiations haven’t gotten to the level of detail on what entity would be responsible for adjusting tax rates. They add that limitations would be needed to avoid runaway taxation in the future.