Utah Gov. Cox vetoes bill to reroute property tax revenue for schools into state general fund

Yahoo

25-03-2025

Utah Gov. Spencer Cox conducts a news conference broadcast by PBS Utah in Salt Lake City on March 20, 2025. (Pool photo by Rick Egan \ The Salt Lake Tribune)
Utah Gov. Spencer Cox issued his first veto for the 2025 Utah Legislature on Monday, saying it was a matter of 'public trust,' accounting problems, legal issues and sending the wrong message to educators that led him to wield his pen.
Cox vetoed SB37 — a rather wonky but important bill that would have fundamentally changed how the state handles property tax revenue that's used for schools.
Currently, about $842 million collected from local minimum basic rate property taxes goes directly to school districts to bolster education funding. However, with SB37, sponsor Sen. Lincoln Fillmore, R-South Jordan, wanted to change that in order to create more budget flexibility and to 'equalize' funding across school districts.
Under his bill, the property tax revenue would instead be diverted into the state's general fund. After receiving the money, the Utah State Board of Education would then have 35 days to transfer an equal amount into local school district accounts. The bill would allow the board to use income tax dollars — which are required under the Utah Constitution to be reserved for education expenses — to replace those property tax dollars in the state's general fund (which can be used for other priorities) before money would be sent back to school districts.
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While opponents, including various educator groups, worried it could jeopardize future education funding, Fillmore argued on the Senate floor it wasn't 'a clever way' for state leaders to 'steal money from public education.'
'The bill requires that whatever money is collected, the exact same amount of money in the exact same time frame with the exact same funding flexibility is distributed to school districts as soon as it's collected,' Fillmore said.
But the Utah State Board of Education opposed the bill. The day before lawmakers' 45-day session ended, the board passed a resolution urging Cox to veto it. One board member, Sarah Reale, described the bill as 'really fishy' and 'money laundering,' The Salt Lake Tribune reported.
Cox, in his veto letter issued Monday, expressed concerns that the bill would not only send the wrong message to educators about lawmakers' commitment to public education, but also create 'accounting and legal challenges.'
'When it comes to trust, nothing is more critical or sacred than the way we handle taxpayer dollars,' Cox wrote, adding that he decided to veto SB37 after he received veto requests from the Utah State Auditor's Office, the State Board of Education, the Utah School Boards Association, and the Utah School Superintendents Association.
'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,' Cox said. '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 out to districts.'
Cox added that 'at a minimum,' SB37's accounting would create 'a perception problem as we lose the direct connection between taxpayers and their neighborhood schools.'
'But the change is more than just a perception problem,' Cox continued, adding that it could open the door to legal questions and accounting problems.
'Moving restricted property tax funding into the general fund creates significant technical and legal questions,' he wrote. 'For one, it's not entirely clear whether these property tax dollars, once they land in the general fund, still carry the restrictions that have always protected them for education use. Without that clarity, future legislatures could easily redirect those funds to other priorities and away from Utah schoolchildren. I oppose that change.'
Then, Cox added, 'there's the accounting side of things.'
'SB 37 sets up a complicated system where school districts have to track these dollars as both incoming and outgoing revenue, while the state does the same,' the governor wrote. '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 that State Auditor Tina Cannon requested a veto of SB37 in the interest of keeping the process 'simple, clear, and transparent.'
'I worry that this bill puts that at risk,' Cox wrote.
But that's not the only reason why he decided to veto the bill.
'Even if I were to ignore these legal and accounting 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,' Cox wrote.
He highlighted that the Utah Legislature has provided a record $2.6 billion in education funding over the past four years, and that lawmakers should be 'commended for your leadership on this critical issue that is so important to our fellow Utahns.'
'I would never want to do anything that would undermine our shared commitment to education funding,' he wrote.
Cox said he appreciated the work that went into SB37. 'But for all these reasons — public trust; accounting and legal challenges; protection of education funding; and the message to our educators — I'm vetoing the bill,' he wrote.
'I'm confident that, working together, we can find a better path forward,' he said.
Through a Senate spokesperson, Fillmore did not immediately return a request for comment about Cox vetoing his bill.
The bill passed with healthy — but not veto-proof — vote margins in the Republican-controlled House and Senate. In the House, it passed on a 41-27 vote, while the Senate approved it 20-8.
It's possible — but not certain — that lawmakers could convene a veto override session.
Senate President Stuart Adams, R-Layton, issued a statement Monday night expressing disappointment in Cox's veto.
'Vetoes are part of the legislative process. However, I respectfully disagree with the decision to veto SB37, which establishes a framework to provide a more fair funding structure, ensuring that every school district is treated equally in terms of state funding,' Adams said. 'The bill does not cut education funding; rather, it stabilizes the funding system, ultimately providing better support for all of Utah's students.'
In response to a question from Utah News Dispatch about whether legislative leaders are considering a veto override question, Adams did not rule it out as a possibility, but did not definitively say what lawmakers will do.
'In the next couple of weeks, we will have discussions with lawmakers and then decide how to proceed,' Adams said. 'We remain committed to ensuring that Utah's education system remains well-funded, well-managed and prepared for the future. We look forward to engaging in further discussions with the governor and all stakeholders as we continue to build on Utah's legacy of educational excellence. I appreciate the governor's commitment to working together to ensure Utah's continued success for generations to come.'
The Utah Education Association, which is Utah's largest teacher union, applauded Cox's veto in a prepared statement issued Monday evening.
'This bill would have redirected public education funds away from Utah's public schools and weakened local control,' the UEA said. 'Utah must preserve education funds for their intended purpose: supporting the success of Utah's public school students.'
Read the governor's veto letter below:
SB37 Veto Letter 03242025
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