Tax reform can get done in special session, but must include tax cut, Utah governor says

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SALT LAKE CITY — Tax reform can still get done in a special session, Gov. Gary Herbert said Thursday, but also warned that any plan that a new legislative task force comes up with may be doomed if it doesn't include a tax cut.

"I believe it's important that we get it right than get it quick," the governor said during the taping of his monthly news conference on KUED. "I think we still have time, in fact, to have a special session."

That's despite the Legislature's new Tax Restructuring and Equalization Task Force not being named until some two months after the end of the general session in March.

Later Thursday, the first meeting of the task force was set for May 30 at 5 p.m., in Room 210 in the Senate Building at the Capitol complex. The meeting will focus on organization and be livestreamed on the Legislature's website.

A special session on tax reform is going to require consensus among lawmakers — something that couldn't be reached during the 2019 Legislature on a bill imposing sales taxes on services, as called for in Herbert's proposed budget.

The governor said Thursday that taxing services still needs to be on the table, arguing that broadening the base for the key revenue source in the state's general fund means the current 4.85 percent state sales tax rate can be lowered.

"Something's got to change. You've got to raise the tax rates on everything else or we're going to broaden the base and raise taxes on some, but then lower the rate so we all pay less taxes," Herbert said.

He said tax reform, an effort intended to boost state sales tax revenues that are lagging as consumer spending shifts from goods to services, has to also offer a tax cut for Utahns.

"The end result of this is that the public should get a tax cut," the governor said. "If we can't get to that point, then probably status quo is going to be what we will suffer through. But I don't think that's going to give us a good end result."

Lawmakers set aside $75 million for an unspecified tax cut in the state budget approved last session, and HB441, the tax reform bill backed by legislative leaders, cut sales and income tax rates in addition to adding new sales taxes on services.

At a Utah Taxpayers Association conference earlier this week, lawmakers involved in tax reform called for "big, bold ideas" to be considered this time around, throwing out eliminating the state income tax or just slashing spending.

Another one of those ideas, amending the Utah Constitution to allow income tax revenues to be spent on more than public schools and higher education, is worth considering, Herbert said.

He suggested lawmakers go even further, and look at other earmarks mainly for transportation that account for nearly 40 percent of the general fund that's supposed to pay for everything in the state budget other than education.

Restoring the full state sales tax on food is also an issue the task force should take up, the governor said, suggesting helping those "really in need" through other tax breaks.

Herbert said several times that the public will have plenty of opportunity for input. The task force co-chairmen have said they're putting together a schedule for a series of town hall meetings around the state.

"I think everybody seems to understand we need to do something," the governor said. "The real question is, what is that something we need to do. Hopefully, over the summer months, we're going to figure that out."

Also at the news conference, Herbert took a swipe at the federal government for not addressing the legalization of marijuana by states including Utah, where voters approved its medical use last year.

The governor said Washington's lack of action has kept marijuana from being treated like other medicines that are subject to testing and approval before being prescribed.

"That's at the feet of the federal government for their lack of action and attention to this issue, putting the states in an awkward position of actually trying to follow the will of the people," he said. "They ought to be ashamed."

The situation makes a good argument for giving more power to the states, Herbert said. He said President Donald Trump's administration seems to understand the bind states are in with marijuana.

"The resolution seems to be slow," the governor said. "Even President Trump has said to me personally, 'Why does the federal government take so long to do anything?' That's a great question. The bureaucracy is slow as coal tar." Email: Twitter: DNewsPolitics

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