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House adopts 5% rule for city-initiated school-district splits; floor amendments fail
Summary
Lawmakers passed First Substitute HB84 to apply the long-standing 5% revenue/cost rule to school-district splits initiated by cities or interlocal agreements; proposed amendments to exempt newly incorporated cities and to raise the 5% threshold to 10% were rejected.
Representative Katy Hall presented first substitute House Bill 84 to extend Utah's existing 5% feasibility rule—used to prevent a new city from "cherry‑picking" tax base—to school districts split by interlocal agreements. Hall said the 5% test requires a feasibility study showing that projected five‑year average revenues for the new district do not exceed projected costs by more than 5%.
Representative Cunningham offered amendment #2 to exempt cities incorporated after May 13, 2014; Hall opposed it, saying it would exempt existing towns and undermine the statewide tax‑fairness policy. Representative Eliason proposed changing the 5% window to 10%, arguing that forecasting errors make a 5% margin too strict; supporters of the 5% figure said the rule already exists in the municipal code and preserves consistency.
After debate and failed amendment votes, Representative Hall urged members to support a mechanism he said had been in code for more than a decade; the House passed the bill 56–14. Hall and others argued the bill preserves methods for citizens to initiate splits and does not prevent other forms of reorganization, while opponents warned about potential erosion of local options.
The bill will be transmitted to the Senate for consideration.
