SALT LAKE CITY — Utah House Speaker Brad Wilson, R-Kaysville, said Wednesday he’d like to see a special legislative session on tax reform before the end of the year so a tax cut can be put in place at the start of 2020 — an election year for all House members and half of the Senate.
“We’re working very hard to find a solution to our tax challenges in this state, our structural imbalance but also, how do we get a tax cut in place for the citizens. Personally, I think a lot of us would love to see something done before the end of the year,” the speaker said.
That way, he said, the lower rate could be in effect Jan. 1 for Utahns, who may be “potentially even seeing their take-home pay and their paychecks bump up to reflect that tax cut.” Legislative leaders have long said they prefer a reduction in the state’s 4.95% income tax rate.
But lawmakers seemed a long way off Wednesday from getting behind a tax reform proposal.
Wilson said he expects the Legislature’s Tax Restructuring and Equalization Task Force to continue meeting over the next month or so to do a “deep dive” on those recommendations, which came from the task force co-chairmen, House Majority Leader Francis Gibson, R-Mapleton, and Sen. Lyle Hillyard, R-Logan.
The task force has not taken any positions on the long list of proposed tax changes they have studied. Hillyard said earlier this month the plan was to bring the chairmen’s recommendations to the supermajority Republican caucuses to determine if the votes were there before making the details public.
What had been anticipated to be the task force’s final meeting, a public hearing on the recommendations next Tuesday, has not yet been scheduled. Members of the task force, which includes tax experts, were supposed to submit any of their own proposals by the end of the week.
We’re working very hard to find a solution to our tax challenges in this state, our structural imbalance but also, how do we get a tax cut in place for the citizens.
And while GOP senators talked specifics in their closed-door midday caucus, including restoring the full state sales tax on food, imposing limited sales taxes on services and removing some sales tax exemptions, House Republicans heard from a national tax expert, Bill Fox from the University of Tennessee, during a brief open caucus.
Before adjourning, Wilson told House Republicans that a tax reform proposal wasn’t coming until next week and stressed the need to deal with a reduction in the state income tax rate by the end of the year in a special legislative session.
”Just be aware,” the speaker told the caucus, “this is probably going to heat up a little bit. And when I say heat up, I mean we’re going to see a lot of stuff come out pretty fast. We’ll try and keep you as informed as we can but I would ask you to reach out to us as soon as you have questions or concerns.”
The 2019 Legislature set aside $75 million for a tax cut, but Wilson said the amount has to be balanced with state needs, especially when it comes to paying for transportation infrastructure, also shaping up as a key piece of the larger tax reform effort.
On Tuesday, Senate President Stuart Adams, R-Layton, confirmed to KSL that charging state sales tax at the gas pump, on top of the 31-cents-per-gallon gas tax, is one of the options under consideration as a result of the work of the task force.
On a gallon of gas that costs $2.50, the 4.85% state sales tax would amount to 12 cents a gallon.
Both Adams and Wilson said a longer-term fix is needed for transportation funding. Gas tax revenues are in decline as more people drive alternative fuel vehicles and have never been enough to cover the cost of roads in the state, so nearly $650 million in sales taxes are shifted to transportation at a time when sales tax collections are slowing.
That slowdown, blamed on a shift in consumer spending from goods to services, has combined with a restriction in the Utah Constitution on the use of the state’s other main source of revenues, income tax, for education to create what lawmakers are calling a structural imbalance.
Adding sales tax to gas purchases, whether at the pump or, as Wilson suggested, on distributors, would be a stop-gap while the state continues to explore alternative road user fees, including charging drivers by the miles they travel.
Neither Adams nor Wilson have ruled out seeking to amend the Utah Constitution to remove the earmark on income taxes for education. An amendment to the constitution must not only pass the Legislature with a two-thirds vote, it must also be approved by voters in a general election.
Other options up for debate are restoring the full sales tax on food while offering some sort of offset such as an income tax credit, adding sales tax to a limited number of services such as Uber rides and streaming services, and removing some sales tax exemptions.
The task force was created last session, after legislative leaders pulled a House bill that would have imposed sales taxes on many services, ranging from haircuts to legal advice, a prospect that drew opposition from the business community.
The intent was for the task force to come up with an alternative proposal in time for a fall special session.
Contributing: Katie McKellar