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SALT LAKE CITY — Utah Gov. Spencer Cox issued the first veto of his second term Monday, rejecting a bill to change how state property taxes are collected, which he argues is a "clear departure" from the practice of spending property tax revenues for local schools.
Rep. Val Peterson, R-Orem, the floor sponsor of SB37, described the bill as "an accounting bill" when presenting it to House colleagues in February, saying it simply directs the county treasurer to return the state's portion of property tax revenues to the general fund before it is sent back to school districts across the state. The bill was introduced by Sen. Lincoln Fillmore, R-South Jordan.
"It does not take away any local control," Peterson said. "It does not change how the school districts can spend their funds, and schools will continue to receive the same amount of funds on the same schedule with complete flexibility."
Cox disagreed, however, arguing in a letter to top lawmakers that it could create the perception that taxpayer money is not being used as intended.
"Right now, Utahns are correctly told by their government that their local property tax dollars are going to fund their local schools. That arrangement is spelled out specifically in our annual property tax notices, and it's a promise we've honored for decades," the governor wrote. "SB37 represents a clear departure from this practice by moving those dollars into the state's general fund, with income tax revenues replacing them before they go back to districts. At a minimum, such accounting creates a perception problem as we lose the direct connection between taxpayers and their neighborhood schools."
Cox added that the bill makes it unclear whether lawmakers could decide to use that money to fund other government services besides education.
"Without that clarify, future legislatures could easily redirect those funds to other priorities and away from Utah schoolchildren. I oppose that change," his veto letter states.
Senate President Stuart Adams, R-Layton, "respectfully" disagreed with the governor's decision to veto and said he plans to discuss how to move forward with lawmakers "in the next couple of weeks." He said the bill "establishes a framework to provide a more fair funding structure, ensuring that every school district is treated equally in terms of state funding."
"The bill does not cut education funding; rather, it stabilizes the funding system, ultimately providing better support for all of Utah's students," he said in a statement.
State Auditor Tina Cannon urged Cox to veto SB37, along with the State Board of Education, the Utah School Boards Association and the Utah School Superintendents Association, according to the governor. In a letter to Cox earlier this month, Cannon said the bill would also present accounting problems for the state, as the tax revenue would essentially be counted twice — once when collected by the county and again when it was transferred to the general fund.
She said the change would require additional disclosures to help people understand how much each entity had in revenue.
"This 'grossing up' makes financial statements look inflated, which creates confusion not just for taxpayers, but also for bondholders and auditors who rely on clean, straightforward reports," Cox wrote.
He added that aside from those issues, "I also worry that this bill sends the wrong message to our schools and teachers about the value we place on our education funding."
"I would never want to do anything that would undermine our shared commitment to education funding," he said.
Utah lawmakers passed 582 bills during the recent legislative session, which ended March 7. Cox has until Thursday to sign or veto bills. He can also choose to let a bill become law without his signature.
