2017 Utah Legislature ends without tax reform, but with action on other key issues

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SALT LAKE CITY — Tax reform, the most debated issue at the 2017 Legislature, never even had a public hearing after closed-door negotiations among Republicans failed to produce agreement on a plan that included restoring the sales tax on food.

Before the 45-day session ended at midnight Thursday, lawmakers had, however, approved a $16.1 billion budget that provides some $239 million in new spending for education, and passed hundreds of bills and resolutions.

Alcohol policy drew plenty of attention, with votes in the final days of the session to allow restaurants to remove the so-called "Zion curtain" that shields diners from liquor dispensing and to drop the legal blood alcohol limit from .08 to .05 percent.

Funding solutions to homelessness was a top priority of House leadership and a bill passed setting in stone June 30, 2019, as the date the troubled downtown Salt Lake Road Home shelter must be closed.

That bill also finalizes the second half of the state's $20 million contribution toward new homeless resource centers, paving the way for two new shelters to be built in Salt Lake City and a third in a yet-to-be-decided city in Salt Lake County.

Lawmakers tackled a variety of health issues, including giving Utah researchers permission to study medical marijuana. They also enacted education programs to help prevent suicide and curtail opioid overdose deaths.

An adjustment to the complicated formula used to calculate the gas tax would boost the price at the pump about 0.6 cents per gallon beginning in 2019 and 1.2 cents a gallon in 2020.

There's a $1 hike in vehicle registration fees, part of a bill eliminating mandatory safety inspections, plus bonds for transportation projects and the prison move, as well as a new sales tax exemption for the production of cleaner Tier 3 fuels.

And lawmakers imposed a statewide transient room tax for the first time to pay for an outdoor recreation grant program. The new tax will add about 32 cents to a $100 room bill, raising around $5 million.

Some legislation has already been signed by Gov. Gary Herbert, including base budget bills and a controversial resolution calling on President Donald Trump to rescind the Bears Ears National Monument designation made by his predecessor.

The governor, who has until March 29 to sign, veto or allow legislation to take effect without his signature, said the Legislature was in sync with his priorities and praised the cooperative nature of the session.

"I give credit to the Legislature coalescing around these issues, and in my view prioritizing them correctly," said Herbert, a Republican. The GOP holds supermajorities in both the House and Senate.

House Speaker Greg Hughes, R-Draper, said he was pleased with most of the outcomes of this year's session, adding that lawmakers got along with each other with little "drama."

Senate President Wayne Niederhauser, R-Sandy, agreed.

"I've never seen the Senate work so well with the House, the House with the Senate, and the governor's office," Niederhauser said. "There's not a lot of complaining."

For Democrats, it helped that the "tone and tenor of the session has been more focused on issues instead of ideological differences," said Senate Minority Leader Gene Davis, D-Salt Lake City.

Even so, lawmakers couldn't come together on tax reform.

GOP legislative leaders tried much of the session to put together a tax reform plan they hoped would broaden the sales and income tax base to bring in more revenue eventually, even while reducing both rates slightly.

Their work was largely carried out behind the scenes and debated in closed-door House and Senate Republican caucus meetings. Democrats were briefed on the proposal but did not participate in the discussions.

But they gave up Monday, citing new data showing boosting the 1.75 percent sales tax on food to the same rate as other purchases wouldn't do much to stabilize one of the state's major revenue sources.

A special joint House and Senate hearing hastily set for Tuesday evening was canceled. It would have been the first opportunity for Utahns to weigh in on a higher tax on food, as well as on the tax credits proposed to offset the increase.

The other piece of what was supposed to be a tax reform package, lowering how much Utahns can earn before losing their income tax deductions, had been rejected earlier.

Advocates for low-income Utahns had rallied against restoring the food tax reduced a decade ago, arguing those who could least afford to pay more for food would be hurt the most.

One of those advocates, Matthew Weinstein of Voices for Utah Children, said not only did they influence public opinion, "the legislators really did seem to listen to the concerns that we were raising. And I give them a lot of credit for that."

The effort on tax reform was prodded by a proposed ballot initiative, Our Schools Now, that would increase the state's 5 percent income tax rate by seven-eighths of a percent, or 17.5 percent, to raise an additional $750 million annually for education.

For the business and community leaders behind the initiative, the plan didn't go far enough. Utah Jazz owner Gail Miller told KSL earlier this session they were looking for something "that's significant and not just a stopgap."

In a statement released Thursday, Our Schools Now campaign manager Austin Cox said the group "remains committed to providing meaningful, long-term funding in Utah to improve the success of our teachers" and plans to go forward with the initiative.

"We will be in neighborhoods this summer to gather signatures and on the ballot in November of 2018,” Cox said. The group will need to collect nearly 114,000 voter signatures from around the state by mid-April 2018 to qualify for the ballot.

The governor said he wants to see tax reform completed during the 2018 Legislature. Lawmakers are set to study taxes, particularly the exemptions, credits and earmarks already in place, during the legislative interim.

"One of the challenges we started this year is tax reform. It is kind of a corollary to education funding," Herbert said. "As you heard me say time again and time again, it is not all about the money, but it is some about the money."

Both Niederhauser and Hughes said they were disappointed that tax reform didn't happen this session.

Hughes said the political will was there but not the numbers needed to make it work.

"I can overcome policy, I can overcome the politics of issues, but I can't beat the math," he said. "We weren't satisfied that the reform measures we were looking at were going to have the desired impact to reduce volatility."

The speaker wasn't quite as confident as the governor that a plan could be in place a year from now.

"We aren't going to pass something just to pass it," Hughes said. "It would have to make sense."

Niederhauser was also cautious.

"It will be politically charged," the Senate leader said. "Those are all tough decisions for a Legislature."

Contributing: Amy Joi O'Donoghue, Katie McKellar, Wendy Leonard


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