Governor, legislative leaders promise fresh start on tax reform to Utah Eagle Forum

Governor, legislative leaders promise fresh start on tax reform to Utah Eagle Forum

(KSL TV, File)

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PROVO — Gov. Gary Herbert and legislative leaders faced an audience clearly opposed to imposing sales taxes on services at a Utah Eagle Forum-sponsored discussion on tax reform Wednesday.

"We're starting over," Senate Majority Whip Dan Hemmert, R-Orem, said after the panel fielded question after question about the failed attempt to pass a tax reform bill last session that would have included sales taxes on a wide range of services.

A similar sentiment was expressed by the governor and House Speaker Brad Wilson, R-Kaysville, who both had to leave before the end of the two-hour event at the Provo Public Library at Academy Square that attracted about 75 people.

"I can tell you that we'd probably all rather take a whippin' than have to talk about tax reform and tax changes because anytime you have a change, somebody says, 'Well, you're raising my tax,'" Herbert said.

Wilson stressed that taxing services is "by no means" the only solution to the state's lagging sales tax revenues and said no one should assume the renewed effort on tax reform is starting where lawmakers left off at the end of the session.

Former state lawmaker Jim Ferrin was invited to speak and told the conservative audience the "best thing" he heard from the panel was that HB441, the bill from last session, had been scrapped.

"Your voice was heard. It stopped this awful bill," Ferrin said to applause. He compared the bill's rapid advance initially to "a freight train" and said he liked seeing the officials onstage squirm. "Keep the heat on. This is working."

Wilson said he gets "the concerns that people have about government getting too big and causing disruption. I don't need to be reminded of that." The speaker asked opponents of HB441 to trust him to look out for the state's economic interests.

The event comes just days after legislative leaders announced the makeup of the tax reform tax force that includes tax experts as well as lawmakers, charged with coming up with a new tax reform proposal.

HB441, which attempted to address the issue by adding new sales taxes on services while cutting both the sales and income tax rates, faltered during the 2019 Legislature.

The bill was introduced late in the 45-day session and quickly met with opposition, including from the influential Utah Eagle Forum, known for its lobbying strength at the Legislature.

Herbert, who proposed broadening the sales tax base to include new services while lowering the rate in his budget recommendations, said at the time he hoped the task force would come up with a solution that could be approved in a special session.

But Utah Eagle Forum President Gayle Ruzicka said during the panel discussion Wednesday that tax reform should wait until the 2020 Legislature begins meeting in late January.

"Please do not do this in a special session. It's too big," Ruzicka told the panel.

Legislative leaders have already suggested the task force, which was put together almost two months after the end of the general session and has yet to meet, may need more time.

Wilson told the Deseret News Monday that a special session "would be my hope. But again, policy is more important than checking the box we had a special deal to deal with it."

Ruzicka made her plea after the governor and speaker had left.

Hemmert said the decision about a special session is up to the governor but acknowledged there are discussions about waiting among lawmakers "that maybe we would prefer this to occur at the beginning of the general session."

Herbert's deputy chief of staff, Paul Edwards, said in a statement issued later Wednesday, "The governor is most interested in doing tax modernization right rather than doing it quickly."

Edwards said the governor "is glad to see the Tax Restructuring and Equalization Task Force getting to work, and looks forward to hearing the results of their outreach and study."

The panel discussion is one of a number on tax reform expected to occur during the legislative interim. All of the panelists, which included Phil Dean of the Governor's Office of Management and Budget, said all options are being considered.

No specific proposals were made by the panelists, although the governor raised the possibility of looking to the state property tax to help correct what he warned is a "potential crisis" as income tax revenues outpace money from sales taxes.

Also brought up as an option to be considered is doing away with the Utah Constitution's restriction that prohibits income taxes from being used for anything other than public and higher education needs.

That would require amending the constitution, a process that starts with the Legislature and ends by putting the proposed change on the next general election ballot for voter approval.

Ruzicka said that's "absolutely" her preference because it would give lawmakers more flexibility in spending money at a time when there are big budget surpluses in income tax collections.

She said the governor and lawmakers are paying attention to the concerns she believes many Utahns share about taxing services such as haircuts, lawn care and professional advice from lawyers and accountants.

"They're listening," Ruzicka said, noting her organization had little trouble during the session rounding up opponents to HB441. "In a matter of a couple of days, the word went out and the people came running. I was astounded."

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