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Show For Q Against Q Proposition No. 4 STATE SCHOOL FUND AMENDMENTS Vote cast by the members of the 1984 Legislature on final passage: HOUSE (75 members): Yeas, 51; Nays, 3; Absent or not voting, 21. SENATE (29 members): Yeas, 21; Nays, 7; Absent or not voting, 1. I I Official Ballot Title: Shall Article X, Section 3, of the State Constitution be amended to modify the revenue sources to the State School Fund to include all revenues from nonrenewable resources from school or state lands; and clarify the funding and administration of the Uniform School Fund, and provide an effective date of July 1, 1987. IMPARTIAL ANALYSIS Proposal The Utah Constitution establishes (1) a State School Fund, and (2) a Uniform School Fund. (1) The State School Fund is a trust fund established by the state constitution to provide a permanent source of revenue for public education. The State School Fund now receives revenues from three sources: (a) proceeds from the sale of all lands granted to the state by the United States for the support of elementary and secondary schools (this land is a one mile square section in each township of the public domain given to Utah at statehood by the federal government); (b) five percent of the net proceeds of federal land sold in Utah; and (c) revenues appropriated by the legislature. Monies deposited in the fund must remain there permanently and cannot be appropriated by the legislature. Interest received by investing these funds are used yearly to help fund publicly supported elementary and secondary schools. Currently the State School Fund has investments of $19.0 million and the interest earned on the investments last year was $1.4 million. (2) The Uniform School Fund is constitutionally established as an operating fund for public education and receives the major sources of revenue for state aid to education. It receives revenues from: (a) proceeds from the sale of all unclaimed property; (b) all unclaimed dividends and shares of Utah corporations; (c) proceeds from the sale of timber, minerals (oil, gas, etc.) and proceeds from other uses of renewable resources from school and state lands as well as income from the permanent school fund investments; (d) proceeds from individual income tax; and (e) funds appropriated annually by the legislature from state general and special revenues. The state government pays approximately 73 percent of the cost of public elementary and secondary education in Utah. The remaining 27 percent of the cost is raised through local property taxes. For the 1984-85 school year the legislature appropriated $574 million of state funds to finance elementary and secondary education in Utah. This represents 37 percent of the total state budget. Of this total, $1.4 million will come from interest on State School Fund investments, $10.6 million will be collected from school land renewable resources and $7.0 million will be collected from the sale of nonrenewable resources on state and school lands. The proposed revision constitutionally changes the manner that proceeds from the sale of nonrenewable (oil, coal, gas) natural resources on school and state lands are used to pay for public education. Currently they are used each year to fund the Uniform School Fund. The proposed revision will provide that proceeds from these resources be placed in the State School Fund rather than the Uniform School Fund, where they will be incorporated into a non-expendable interest bearing trust fund. This shift in funding will increase investments of the State School Fund and eventually will provide for increased interest payments to the Uniform School Fund. This plan would, however, result in an annual reduction in funds availble to the Uniform School Fund until interest earned on the investments of the State School Fund would be sufficient to replace tiie revenues currently earned on the nonrenewable resources. This proposed revision will also provide for clarification of the administration of the State School Fund and the Uniform School Fund. Effective Date The amendment, if approved by the voters, would become effective July 1, 1!)87. Fiscal Effect Because the revision is not effective until July 1, 1987 there would be no immediate fiscal effect for the next two fiscal years. However, when implemented in 1987 there will be an initial loss of revenue on nonrenewable resources to the Uniform School Fund. However, this will be offset by a long term increase in interest revenue from investments in the State School Fund. Arguments for Proposition 4 will reduce the tax burden on Utahns! Our constitution provides for a State School Fund to help pay for public education. Only the interest from the fund can be spent. The State School Fund is presently very small. Interest from the fund pays only 2 percent of the cost of public education. That figure is low because the constitution limits the revenues which go to the State School Fund. The State School Fund's major source of revenue is the sale of state school lands. Revenue from the use of these same lands, such as mineral and timber rights, does not go to the State School Fund. Instead, this money goes to pay current operating expenses for the public schools. Proposition 4 will transfer some of this money which presently goes to general education funds, to the State Shool Fund. As a result, the State School Fund will increase substantially each year. As the fund grows, the interest payments will increase. EwiituaUy, inUrestfrom the fund could pay a major pari of slate education expenses. Non-renewable resource money is being spent with no though for the future! Much of the revenue from school lands comes from resources that cannot be replaced. These include oil, gas, and other minerals. Once these assets are extracted, their revenue potential is gone forever. We are now using these important resources for our own advantage, with no thought for the future. The money is used to pay for current public school operating expenses. This is unthinkable! As these resources are used up, the revenues they provide will have to be replaced by increased taxes! Proposition 4 ensures that proceeds from non renewable resources will be saved for current and future generations of taxpayers! We must save for the future! It is a fact of life that to get ahead, we must save for the future. No one gets anywhere by spending everything. Proposition 4 will help Utah save for its children's future! Proposition 4 will protect significant revenues for the State School Fund! Proposition 4 will constitutionally protect major revenues for the State School Fund. Funding decisions made by statute may be changed by the legislature. Political pressures may alter the fund. Proposition 4 permanently protects the State School Fund as a major source of education funding! Proposition 4 will gradually transfer revenues to avoid budget problems! If the money coming from nonrenewable non-renewable resources were transferred immediately into the State School Fund, it could seriously affect the state's budget. Under Proposition 4, the transfer of revenues will not take place until 1987. This plan will give state government time to make a smooth transition. Proposition 4 will allow for a portion of the money to be transferred each year until the full amount has been moved. Vote "FOR" Proposition 4 for the sake ,if lower taxes and current and future generations! Senator K.S. Cornaby Senate Majority Leader 3794 Hermes Drive Salt Lake City, Utah 84124 Representative Ervin M. Skousen 3316 Metro Way Salt Lake City, Utah 84109 it Rebuttal to J; Arguments in favor of Proposition No. 4 1 We cannot afford to pass Proposition 4! Proposition 4 would take S7.0 million away from the revenues that can be used for education's immediate, pressing needs. In order to continue funding education at present levels, $7.0 million would have to be supplied from other sources, such as taxes. These revenues would be locked into a trust fund that might or might not grow into a significant funding source in the future. At a time when many areas of education are critically underfunded, this is unwise! Proponents of Proposition 4 will claim that since the state has a surplus this year, the money would be set aside without raising taxes. Even with a surplus, though, there are many areas of greater importance than locking revenues into the State School Fund. By passing this amendment, we will be taking money away from some urgent need! Proposition 4 limits the power of the legislature to wisely allocate money! To ensure that the best possible decisions are made about how to spend the state's money, the legislature should be allowed to allocate money as needed. Funding needs vary from year to year. Only the legislature has the power to adjust funding as appropriate. Dedicating revenues in the constitution limits the legislature's ability to apportion revenues wisely! Proposition 4 is an unwise amendment to the constitution! VOTE "AGAINST" PROPOSITION 4! , Senator Wilford R. Black Senate Minority Leader 826 North 1300 West Salt Lake City, Utah 84116 1 Arguments Against 1. Proposition 4 will reduce education funding by millions of dollars over the next few years! This money will have to be replaced from other sources! Supporters of Proposition 4 claim that it will not reduce education funding. They say it will only change the way that educat ion is funded. This is untrue! Proposition 4 will transfer revenues into the state school fund that have historically been used for current education needs. Putting these revenues into the state school fund will decrease the amount of money available for immediate use. Many years will pass before the increase in interest on the state school fund equals the extra amount of revenue going into it. Until then, education funding will fall millions of dollars short of present levels. Utah's budget is already very tight. Providing extra funds to make up for the shortfall will be difficult. Raising taxes, or levying new taxes, will probably become necessary. Extra funds will have to be provided every year until the interest on the state school fund equals the revenues from non-renewable resources. In short, Proposition 4 will place a burden on taxpayers for years to come! 2. Proposition 4 will not really increase education funding for many years! Supporters of Proposition 4 claim that the increased interest from the state school fund will eventually pay a major part of Utah's education bill. With the additional revenue, taxes could be lowered. It will take many years to reach that point! Consider the facts: If the annual revenues from non renewable resources continue to be about $7 million dollars (the 1983-1984 1983-1984 figure), it will be 10 years before the interest 1 on the fund even replaces itse(P Even if Proposition 4 works the way its sponsors claim, it will be a long time before Utah taxpayers realize any benefit. On the other hand, taxpayers will probably see increased taxes right away! Proposition i will take too long to produce real benefits! 3. The state needs all current revenue sources to fulfill its obligations! Utah's resources are strained to the limits. Many important programs have gone without funding because of lack of money. Proposition 4 will tie up millions of dollars in a trust fund. The state would benefit more from spending the money nowWhile the money might be useful in the future, it would definitely be useful now. There are also other considerations. Inflation may lessen the value of the dollars we save now. By saving money for the future instead of spending it now we may not be able to get the greatest value for our money. Spending money now on critical educational needs may reduce the amount of funding necessary for remedial programs later. For Utah's sake, we need to spend this money now! VOTE "AGAINST" PROPOSITION 4! Senator Wilford R. Mack Senate Minority Leader 8211 North 1300 West Salt Lake City, Utah 84110 Rebuttal to Arguments against Proposition No. 4 1. Even the opponents of Proposition 4 admit that it will eventually increase funding for education. They are merely unwilling to exercise the discipline that it will take to reach that goal. Any savings or investment program is a plan for the future, and involves sacrifice. No matter what the future cost of education is, every dollar of interest from the Sl ate School Fund will be one less dollar t hat has to come out of the taxpayer's pocket! 2. The funds that Proposition 4 will transfer into the State School Fund arc from non renewable resources. Mien those resources are depleted, that source of income will be gone foreverf'The taxpayer of the future will have to make up the difference out of his pocket. It would be intolerably selfish to squander the income from these nonrenewable resources with no concern for the future. 3. Opponents claim that every available penny is needed to meet the obligations of the state. This is not true! Sl ate spending could be cut. During the past three years the Governor has ordered 2 percent reductions in spending on seven different occasions, with only small impact on state operations! Scrupulous budget analysis by the legislature will make up for the shift of funds proposed by Proposition 4. No increase in taxes will be necessary! Governor Matheson says: "The time has come for Utahns to face up to the rising cost of educating our children. We cannot afford not to support this constitutional amendment!" VOTE "FOR" PROPOSITION 4! Senator K.S. Cornaby Senate Majority Leader 3794 Hermes Drive ' Salt Lake City, Utah 84124 Representative Eivin M. Skousen 3316 Metro Way Salt Lake City, Utah 84109 COMPLETE TEXT OF PROPOSITION NO. 4 STATE SCHOOL FUND AMENDMENTS A JOINT RESOLUTION OF THE LEGISLATURE PROPOSING TO AMEND THE UTAH CONSTITUTION; RELATING TO PUBLIC KIM V1IO.N; MODIFYING THE REVENUE SOURCES FOR illE STATE SCHOOL FUND AND THE UNIFORM SCHOOL KIND. THIS RESOLUTION PROPOSES TO AMEND ARTICLE X, SECS. 3 AND !) , OF THE UTAH CONSTITUTION. Re i I resolved by the Legislature of the State of Utah, two-thirds of nil members elected to each of the two houses voting in favor thereof: Sect ion 1 . It is proposed to amend Article X, Sec 3, of the Utah Constitution, to read: Sec. 3. (1) (The) Except as provided by. statute for the necessary cost of land administration, (a) proceeds of the sales of all lands that have been or may hereafter be granted by the United Stated to this state, for the support of the common public elementary and secondary schools, (b) attd five pet eeftttHtt 5 of the net proceeds of the sales of United States public lands lying within the states and sold by the United States subsequent to the admission of this state into the Union, (c) all revenues derived from the use of nonrenewable resources from school or state lands, other than those lands granted for other specific purposes, and (d) other revenues as appropriated by the legislature, shall be and remain a permanent fund, to be called the State School Fund, the interest of which only, shall be expended for the support of the common public elementary and secondary IlOOlri. t ii" IlllrrrrU On ill" ru at" nCftmn r UilU, LTi" prof TV US of rntW property thttt may accrue to the state by the escheat or forfeiture, H onrlaimed shares and dividends of any corporation incorporated tntder the laws of this state, tire proceeds of the safes of timber, and the proceeds of the sate or ot her dtsposttton of minerals or other property front school and statue lands, other than, tltose granted for specific ptfrjOMrJi, Jtitsn Witii sin it outer revenues as tit" legislature may from tune to time allot thereto constitute a futtd to be known as fhe Uniform School Fotrd; whteh Uniform School Fond shaH be mamtamed and ttsed for the support of the common and pttlHtf scbttots of the state and apportioned itt such a manner as the legislature shaH provide. The provisions of Section Article XH4 of this Constitution shaH be cuiisixueu tra a iiiiiiiaiioii in me nttt? nt laXaiiuii ttrt laiiginie property fof district school purposes and not ott the &moutifc of funds available therefore fttidy further, rto moneys allocated i r t I. I T . f.. C' 1. .... I C . wl .. It n I I lJL ... . . .J .. -I B f. .... t I. .. TT; t ITT: t TTI KM ITT OCmHIl ruTTu 91ml I nt; vtnTTITtlt I u tit II Xing tttt? rates of taxation specified ttt Section ? of Article XH4 J. (2) There is established a Uniform School Fund which shall consist of revenue from three sources: (a) interest from the State School Fund; (Jb) except as appropriated by the legislature for the Slate School Fund, revenues derived from the use of renewable resources from school or state lands, other than those granted for specific purposes: and (c) ot her revenues which the legislature may appropriate. f the interest generated by the State School Fund exceeds the amount of interest required to fund the Uniform School Fund, as appropriated annually by the legislature, the excess shall pass through to the General Fund. The Uniform School Fund shall be maintained and used for the support of the state's public elementary and secondary schools and appropriated as the Legislature shall provide. Section 2. It is proposed to amend Article X, Sec. 5, of the Utah Constitution, to read: Sec. 5. The proceeds of the sale of lands reserved by an Act of Congress, approved February 21st, 1855, for the establishment estab-lishment of the University of Utah, and all the lands granted by an Act of Congress, approved July 16th, 1894, shall constitute permanent funds, to be safely invested and held by the State; and except as provided by statute for t he necessary cost of land administration, the income thereof shall be used exclusively for the support and maintenance of the different institutions and colleges, respectively, in accordance with the requirements and conditions of said Acts of Congress. Section 3. Statutes and regulations in existence on the effective date of this amendment that are not inconsistent with the amendment shall continue in force and effect until repealed or changed by statute-Section statute-Section 4. The lieutenant governor is directed to submit this proposed amendment to the electors of the State of Utah at the next general election in the manner provided by law. Section 5. If approved by the electors of the state the amendment proposed by this joint resolution shall take effect July 1, 1987. |