H.B. 300 School District Taxation Amendments: transcript

There we go. Let's see. Thank you. So, uh, last year we made a change in our, uh, in our code that affected how we do, how we, it it affected the incentives that that local school boards have in, in their, how they do their taxation. Um, we change, so how I, everybody knows the basics of property taxes. You're the, the, the amount taxed is, is the rate times the, the assessed value. And so, um, in order to get the full state, um, uh, guarantee for, for education that for any, for our, uh, our education equalization initiatives that we've been doing, uh, we need to make, we, we, the state has asked the local school districts to put in a certain amount of effort and we, we require, uh, the tax them to be at a certain tax increment to, to get the full state guarantee. And, uh, what used to be in our code is we had, um, kind of a, a five year hold harmless, uh, on, on that, on that guarantee. So if, if they, so that they didn't have to raise taxes every other year as, as, as housing, uh, val, as the house value has go up. So what this really does is it, it, it reverses what we did last year, um, and reverses that gi gives back that five year hold harmless from the, the, uh, from, from the one year. And of note, we should know that there was a Senate bill that ran, that was run on this last year that Uintah natural resources and the natural resources actually killed that bill. But then, uh, but then it was kind of snuck into House Bill two. Uh, so I think I did a pretty terrible job at explaining that. But, um, it, it's, it's pretty much fairly simple. We have, uh, the, the school districts are supposed to be at 20 tax increments, and if they're not at that 20 tax increments, then they do not get the full, uh, full state guarantee. But right now they're incentive. But right now, with the rising home prices, that ends up being every other year because as the, as the values of everybody's homes go, or of their property goes up, the tax, uh, rate goes down below the 20 tax increments, and it, it keeps happening over and over again. So this would allow the, um, it would put it back as it was before last year, and it would allow more flexibility for the local school districts, um, as, as we, as we see a lot of, uh, fluctuation in, in the market of, of property values. So, open for any questions.

I hope you can see me. Sorry about that. I'm actually was just out at a school. My name is, uh, Ben Ley. I'm Superintendent Granite School District. And I just wanna say, uh, my, I express my gratitude, uh, to the good representative for bringing this fix. It is definitely a fix. And, uh, to put simply what he has already indicated, um, what was, what happened last year with HB two, basically punish, uh, local entities for not raising taxes sufficiently, uh, and more often. And so what this will actually do is put us back on pace for not having large tax increases, uh, but breaking those out, um, over a more, uh, regular basis. So this is excellent policy. It's worked well for us for many, many years. And, uh, I, I can tell you, uh, from a budget perspective, granite School District, as a result of some of the changes made in HB two faced a four, $4 million shortfall, uh, above and beyond the WPU increased last year and is looking at $7 million already for this year and the next year as a result of this change. And so we obviously, heartily with a, a district with declining enrollment would much rather be able to, uh, ease off of that revenue as, as opposed to, since 90% of my budget goes to personnel, make a, a significant and sharp cut that will impact services, uh, and be a huge detriment to our students. So thank you to the representative. This is good policy and we appreciate the fix.

No, I pulled over. Okay. All right.

Uh, thank you superintendent chair. I appreciate that. Thank you, you so much.

You, Mr. Chair. You don't have a sub. Right? I would move that we favorably recommend House Bill 300 school district taxation amendments. Would like to speak to that. It was actually on the Natural Resources Committee that killed this, so I am grateful for the fix.

Yes. Um, I, I appreciate the, the support from our, our wonderful superintendent. I, I hope he rec supports my other bills. I'm running this session. I think he'll love them. But, um, the, uh, yeah, I, I think this is just, it allows for more stability and more flexibility with the local school districts. Right now, with the, the way that housing costs have continually gone up. I think it would mean a, a tax increase every year, every other year, just to maintain that for a lot of these different, a lot of these school districts. So, um, I, I, I'd appreciate your support.

I'll Waive. Waive. Okay. Alright.

All right. Tha Thank you Mr. Chair. Uh, I dunno about you guys, but I think the number one issue I hear about most for my constituents is property taxes. And, uh, they, uh, um, and when my school district, uh, raised their property taxes last year, my social media visits went up 5000%. So, um, not 500%, not five, not 55000% because they were looking for somebody to help them that wi with the issue. So I, um, looked into it and I, I, I called my, my school board and they said, well, we have to keep ra. And this was the, the, it had been raised the, for three times in four years. And they said, well, uh, I said, why do you guys keep raising property taxes? And they said, well, that's because the incentives from the, the state are to raise the property taxes, we require, um, the tax increments to be, we require 20 tax increments at the local level, um, from the voted and board local levies to get the full match from the state. And, uh, that used to be five years. And then we, we recently put that at one year. So what we're looking at is every other year is your values of your, your home go up, your rate goes down, and that takes you that a lot of times that'll take you below that, that 20 tax increments. So as values go up, we could be looking at the locals having to raise taxes every year, every other year. So I, um, I'm proposing that, that we change it back to five years. Um, uh, so that, that it'll give at, at a minimum, it'll, it, it, it will give, uh, give the locals some flexibility on, on when they do, when they raise taxes or when they don't. Um, and, um, it'll decrease the incentive for them to raise taxes, which is, uh, not what our, our constituents want. They, uh, um, you know, we, we have the, the three types of taxes. We have our income tax or property tax and, and sales tax. And I, I think people hate property tax the most. Um, and, and I think that's because we, the property tax is, it's, um, it's there whether or not you can pay it. Right. And so this is a real, very real thing for people in my neighborhoods that are being pushed outta their homes, um, because we live in a place that's very nice, and the, and the property value is going up quickly. And if they've been there for generations, um, um, they fi find at some point they can't live there anymore. And I understand that, yeah, maybe they'll have to raise it at the end of that five years, but I, I think we, as a legislature, we should probably be looking at how we can decrease the incentive to, to have the property taxes go up so quickly. Um, but I think this, this will give the local some flexibility and, uh, and if nothing less, we'll hear from our constituents every five years on the subject instead of every other. So, uh, that, that, that concludes my presentation. Thank you. Okay.

Alright. I just really appreciate the bill. You know, you want to have, uh, you don't want to incentivize to never adjust for inflation, but you also don't want to create something where they have to always adjust for inflation. And I think this strikes a good balance. It's a good bill. Thanks.

I move to recommend favorably HB 300 A motion before a is to pass favorably house bill 300 school district taxation amendments.

I'll waive. Okay. I'll waive Senator

I, I think I said most of it, but I, I'd appreciate your support. I I think that there is further work to do in this area as always, but, uh, I think this is a, a good move in the, for right now.

Madam Reading Clerk House Bill 300 School District Taxation amendments by Representative Kyle. This bill was heard in revenue and taxation with Vote 10 0 1.

Thank you Mr. Speaker. Uh, uh, Mr. Speaker, um, the thing I hear about most from my constituents is about property taxes. They are sick of rising property taxes, and we have a, a policy that in our, in our code that incentivizes school districts to raise their taxes every year as our assessed values go up. So our, our, uh, so in areas where everybody knows that property taxes, your assessed value times your rate, and that equals your revenue, and as your assessed value goes up, your rate goes down. And our our code currently requires that we have, uh, a a, the school, local school districts will have 20 tax increments to get the full state guarantee. So what this bill does is it says, and, and we've done that so that we, um, can make sure that the local school districts are, are meeting their effort with, with the state, which is important. But as, as property values continue to rise, we, um, we don't want to have to, we don't want them to have to raise their taxes every single year, uh, as they go below there 20 tax increments. So what this, what this bill does is it says, okay, you've met your effort. Um, you're still, you're still bringing in the same revenue that you did that year, but as you're, but we're gonna give you five years of, of the hold harmless so that you don't have to raise your taxes every year just because your values are going up. So this, this, uh, kind of gives the, um, the locals some reprieve. It helps pe uh, uh, people stay in their homes that so that they can afford it. A lot of people that maybe don't make a lot of money that are in the area where that is, is, uh, increasing in value significantly, uh, are are, are hurt by the current policy. So this, this will just help them help, uh, the local school districts have more flexibility and to, uh, reduce the incentive incentive to raise tax raise taxes. Thank you.

Thank you, Mr. Speaker. Will the, uh, sponsor yield to series of questions Representative Kyle, will you yield to a series of questions?

Yes, yes, representative.

Thank you. So, uh, I have a bill that actually does the opposite, that takes away the hold harmless ti period. And the reason I thought of that is because, uh, with, with the hold harmless period, what happens is these, the taxing entities will hold off and hold off and hold off because they're afraid to, uh, make any tax changes and then all of a sudden you have a 30% increase. And I was just wondering if you could, uh, maybe address that and why one way would be better than the other?

Uh, yes, Mr. Speaker, I, I, I think that, um, so I had a, I have a school district that has raised taxes three outta the last four years. And I, um, it's not really sustainable. So I, I think this gives, gives, uh, local school districts, uh, time to, um, it gives them the flexibility. It doesn't say they can't raise taxes if that's the policy they want to adopt, but as we see the, the markets change with, with the, uh, our housing values, um, it, I think it gives more time for, for things to normalize and, and potentially, um, a respond to at a local level on whether they need to raise taxes or not. Um, Yeah, sorry. If that, if that's something that they want to choose to do, this gives them that flexibility. So does this, this allows them not to have to come up to the 20 basis points to, to qualify for state, uh, participation. Is that right? That is correct For, for, uh, at least five years. So if they, if they meet, if they meet their effort, um, you know, they're, they're doing their part and but all of a sudden their, their, the values of, of their homes or, or, or their, the values of their, um, their property rises, it, it makes it, um, that that's not really their fault. So it just gives them more flexibility to, to deal with that.

Well, at the end of the five years, uh, what do you expect will happen then? I, I expect they'll have to, to raise their taxes, but that, that's, that's up to them on how they do it. Okay. Thank you, Mr. Speaker. Appreciate it.

Thank you, Mr. Speaker. So this, this concept that we have, it's actually not new. Um, th this policy was only changed last year. Um, it was actually in a senate bill that was killed in, uh, on, on our side, on our, in our chamber. Uh, but it was kind of, it was put into another, uh, funding bill last year. And, uh, so it's, this is, uh, I, I believe this is, uh, what our body would, would like, or at least, uh, and this is what I'm hearing from, from school districts as well, is that they appreciate it. Uh, so I I I encourage your support. Thank you.

You. Last year there was a change to the, uh, five year, uh, hold harmless period. Uh, it went from five years down to one year. Uh, good representative from uh, Davis County went through and wanted to restore that based on discussion with his districts, uh, from the one year that was put in code last year to five years. My intent is to go through and if this passes, move it to third until we finish our negotiations on how long this period of hold harmless should be. Thank you for the presentation. Seeing no discussion of the bill, I'm gonna go to you for sum summation in a motion. Thank you.

I'll move that house. Bill 300, be read for a third time.

Mr. President, motion to encircle house bill 1 78, second sub.

Thank you Mr. President. Um, the legislature had a great idea a couple years ago.

Thank you. I'd move to amend on line 72. Delete the number five and replace with two. So is this a floor amendment or is this is A floor amendment? Yes. Okay. Lemme make sure I I get it right here. Line 72. Okay. Lemme make sure the circle has it too. So let's, why don't you go ahead and repeat that amendment. Yeah. That, So on line 72, delete the word number five and replace it with two. So it would read for a period of two years following a change. That's the only change. That's it.

This is the, uh, the bill. We changed this, uh, statute last year, uh, reducing of five years down to two, uh, down to one year discussion with, uh, uh, caucus members and stakeholders on this. We decided the proper place to put it is at two years, uh, in order to go through and, uh, balance out everything that goes with the valuation certified tax rate and the uh, uh, different formulas that we have in statute.

Thank you Mr. President with sponsor yield. Senator Harper, will you yield? Yes, go ahead. Senator Vickers. Yeah, Clarifying question. I've heard people a lot smarter than me talk about this. That two years is effectively three. How does that work, Senator Harper?

Well, we're in the current all on, yeah, we are in year one. And then, so two years down the road, it actually put three years before the would actually impact the budget. So, uh, it, 'cause we count the current year and it's just two years from That. So effectively a two year means they have three year look back.

Correct. Okay, thanks.

Thank you. I'll move that house Bill 300 as amended pass. Thank

That's correct. Motion to encircle Senate bill 97. First substitute.

Thank you Mr. Speaker. I move that the House Concur.

Yes. Um, this, uh, is just a compromise. We move back the hold harmless, uh, language from five years to two years because the Senate's not as cool as us. So