Steve Griffin, KSL

Utah lawmakers racked up results – but not on tax reform

By Lisa Riley Roche, KSL | Updated - Mar 14th, 2019 @ 11:29pm | Posted - Mar 14th, 2019 @ 1:44pm

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SALT LAKE CITY — Lawmakers took on tough tasks during a legislative session that ended an hour earlier than expected Thursday night, and racked up results on big issues, including limiting Medicaid expansion and enshrining hate crime penalties.

By the start of the third week of the 45-day session, a scaled-back replacement for the full Medicaid expansion approved by voters last November had been signed into law by Gov. Gary Herbert despite protests from faith leaders and others.

Under the direction of new leaders in the House and Senate, the Legislature's Republican supermajority shifted its focus to tax reform, but the bill that surfaced late in the session ended up being scrapped in favor of a tax task force.

HB441 would have extended sales taxes to a wide variety of services while lowering both the sales and income tax rates, options that will be on the table for a possible special session this summer, along with restoring the full sales tax on food.

Republican legislative leaders also wanted a $75 million tax cut as part of the tax reform legislation and have set aside that amount for an as-yet unspecified cut in the $19 billion budget for the spending year that begins July 1.

But Thursday, the governor told KSL that a $75 million tax cut isn't enough.

"I think there is an opportunity to still have tax reform, better tax policy, which will provide the revenues necessary to run the core services of government and still have the best environment for business," Herbert said.

"I think if we do all that, there still can be a healthy $150 million to $200 million tax cut to the public. I think that's possible," said the governor, who proposed a $200 million sales tax rate cut as part of the tax reform plan in his own budget.

Legislators in the House of Representatives work into the night during the final day at the 2019 Legislature at the Capitol in Salt Lake City on Thursday, March 14, 2019. (Photo: Steve Griffin, KSL)
Legislators in the House of Representatives work into the night during the final day at the 2019 Legislature at the Capitol in Salt Lake City on Thursday, March 14, 2019. (Photo: Steve Griffin, KSL)

Senate President Stuart Adams, R-Layton, said the size of the tax cut will depend on what a new plan to shore up lagging sales tax revenues looks like.

"If we get a really good tax reform, I think we can afford a larger tax cut. If we don't, then I think we probably shouldn't do a larger tax cut. It's all relational," Adams said.

For House Speaker Brad Wilson, R-Kaysville, not being able to deliver a tax cut this session was a disappointment. He said he would "definitely hope" Utahns will see a reduction in their taxes coming out of the task force efforts.

"I think we would like to do a meaningful tax cut and I’d love to do something more than $75 million," Wilson said. "But $75 million is enough of a tax cut that it can have a really meaningful difference on a typical household."

The failure to find a tax fix led to a budget impasse until the House speaker and the Senate president agreed to only temporary funding for $320 million of the $19 billion budget.

The purpose behind not promising future funding for budget items like expanding the disability services waiting list and substance abuse treatment for the homeless is to prod action on tax reform, Adams said.

"There'll be urgency, 300 million reasons for urgency," he said. But he stressed that lawmakers had many significant accomplishments. "Sessions are always hard, and I think this is no exception. It's 45 hard days. But it's been very productive."

House Speaker Brad Wilson, R-Kaysville, smiles and gives a thumbs up as a bill is read in the right order on the final night of the 2019 Legislature at the Capitol in Salt Lake City on Thursday, March 14, 2019. (Photo: Steve Griffin, KSL)

All the budget concerns didn't hurt funding for education, although the $1.3 billion surplus announced late last year sparked expectations there would be even more for public schools and higher education.

When state revenue estimates were revised midsession, the surplus had dropped about $200 million. Lawmakers still found money for air quality improvements, affordable housing programs and boosting the technology economy.

But after House Democrats raised concerns, a decision was made not to spend $1.5 million to help the University of Utah's Kem C. Gardner Policy Institute house the temporary offices of a planned library for former Sen. Orrin Hatch.

This session also saw the passage of long-sought hate crime legislation that enhances penalties for criminals who target their victims based on race, sexual orientation, religion or other personal characteristics.

SB103 initially struggled to gain support, but it's sponsor, Sen. Daniel Thatcher, R-West Valley City, kept adding to the list of characteristics that could be targeted to include where victims attended college and their "political expressions."

Other high-profile efforts included reaching a compromise to raise the allowable alcohol content by weight from 3.2 percent to 4 percent instead of 4.8 percent for beer sold in retail outlets rather that state liquor stores.

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What attracted the most attention this session was the fast-paced replacement for the full Medicaid expansion backed by Utah voters after lawmakers repeatedly failed to accept the federal health care coverage available under the Affordable Care Act.

Limiting Medicaid to only a portion of the more than 150,000 Utahns eligible was opposed by some 40 faith leaders as well as backers of Proposition 3, but SB96 was signed by the governor shortly after final passage.

The bill had to be amended to secure enough House votes to prevent a ballot referendum on the issue and now has a fallback plan reverting back to full coverage if a series of needed waivers don't come through from the federal government.

An initial program is set to start April 1 offering Medicaid only to Utahns earning up to 100 percent of the approximately $12,000 federal poverty rate at a lower federal-to-state funding match than full expansion, 70 percent to 30 percent.

But there's still no word from Washington on the first round of waivers, let alone the permission needed to offer the same program at a higher federal-to-state funding match, 90 percent to 10 percent, according to the Utah Department of Health.

Abraham Roe creates giant bubbles outside the Capitol on the final day of the 2019 Legislature in Salt Lake City on Thursday, March 14, 2019. Roe says the open space in front of the Capitol is perfect for creating the bubbles. (Photo: Steve Griffin, KSL)

Adams said he's been assured those waivers are "on track" but if they aren't in place by April 1, lawmakers now have the power to call themselves into a special legislative session.

"We'll want to make it happen," the Senate president said. "I think we have a committment to the voters and I think to our constituents."

The governor said the state's Medicaid expansion is "going to absolutely happen" on schedule and praised the program as ensuring Utahns have access to health care "one way or the other."


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