RDAs divert property tax money from schools
Redevelopment agencies are expected to divert $48.8 million in funding from Utah's public school districts in fiscal year 2005.
Overall, the redevelopment agencies will receive $98.2 million in revenues that would have gone to counties, cities and special service districts as well as the public schools, according to Utah Taxpayers Association calculations based on state tax commission and office of education data.
Redevelopment agencies utilize a concept known as tax increment financing, explained the independent public policy organization. The increment refers to the increased property tax due to the developer's investment.
Normally, local governments like counties and school districts would receive 100 percent of the property tax increments.
But under redevelopment agencies, the majority of the incremental property tax revenues are diverted back to the developer to cover infrastructure costs.
The share of statewide RDA diversions coming from the public education system registers at 49.7 percent, slightly lower than the 55 percent of statewide property taxes allocated to fund school districts, indicated the association.
Since the statewide ratio of weighted pupil units is roughly 1.3 to 1, the reduction of $76.97 per WPU translates into approximately $100 per student per year, pointed out the independent public policy organization. In the last 10 years, RDA diversions have grown at 12.3 percent, more than double the 5.5 percent rate of total statewide property tax collections.
In Carbon School District, the property tax diversion associated with redevelopment agencies totals $120,391, according to the association's calculations. The estimated $22 reduction in Carbon County's weighted pupil unit translates into approximately $35 per student per year.
In addition, more than $12.4 million in property taxes will be diverted to RDAs from the minimum school program in 2005, noted the association. The minimum school program represents the primary funding mechanism for public education in Utah. The program accounts for 68 percent of all kindergarten to grade 12 operations and capital spending in the state.
Had school districts actually received the $12.4 million in property taxes, spending per WPU would have been $19.30 higher or roughly $25 per student, noted the association.
The statewide basic levy for education represents a fundamental component of Utah's minimum school program, pointed out the independent public policy organization. The levy is applied at the same rate statewide and is used to equalize funding between school districts. The more funding public schools receive from the application of the statewide basic levy to local property tax bases, the less state income dollars the districts receive.
A redevelopment agency in one area impacts all school districts in the state, indicated the association. School districts with RDA diversions receive more state income tax dollars to compensate for reductions in basic property levy funding. RDAs occur in 27 of Utah's 40 school districts. RDA diversions are most prevalent in Salt Lake, Park City, Ogden, Logan and Rich districts.