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SALT LAKE CITY — The state’s tax reform task force voted 6-3 to recommend a 199-page draft bill to the full Legislature Monday, less than three days after the bill was unveiled to the general public.
The vote comes in the same week lawmakers are expected to convene in a special session to address a sweeping change to Utah’s tax code. More than three hours of mixed public reaction greeted the Tax Restructuring and Equalization Task Force as it held its last public meeting Monday night.
No one showed up in a Grinch costume like earlier meetings, but concerned citizens pushed back against the plan, urging lawmakers not to raise taxes on food, gas and some services while lowering income taxes — and to not do it in what some called a rushed special session.
“I understand you’ve taken a lot of time throughout the year, but in reality the Utah citizens have not. They need to understand why we need to raise taxes on food,” said Jessica Bianco of Lindon. “They need to understand what’s going to happen to their children’s education ... I urge you to vote ‘no’ and take it to the general session.”
On the other hand, several businesses representatives expressed support for the proposal, lauding lawmakers for working for months to create a plan to address the state’s budget problems while listening to concerns.
John Valentine, chairman of the Utah State Tax Commission, urged the task force members to endorse the proposal so lawmakers could pass it in a special session rather than waiting to “kick the can down the road” and address it in a general session.
“We do have a budget problem,” Valentine said, noting the state can’t tackle the complicated issue of tax reform while also prioritizing its budget in a general session. “You can’t do it unless you solve the underlying budgetary problems.”
Rusty Cannon, vice president of the Utah Taxpayers Association, urged support from state lawmakers on the bill, saying it will “deliver a significant tax cut to taxpayers” that will offset additional taxes on fuel, groceries and some services.
Tonight, the Tax Restructuring and Equalization Task Force voted to recommend a proposal for the full legislature to consider that will address the imbalance in the state budget. #utpol#utleghttps://t.co/1DOTEN9kBlpic.twitter.com/VHtF3kJXFE— Utah Senate (@utahsenate) December 10, 2019
“While we have a few concerns over parts of the bill, including the increase in the motor vehicle rental tax and elimination of the sales tax exemption for electricity on ski lifts, we believe legislators want to get this right,” Cannon said.
Monday’s meeting occurred more than a week after what was supposed to be the last meeting of the Legislature’s tax reform task force — but the process was extended to give task force members more time to work behind the scenes on changes that boosted the overall tax cut from the previously proposed $80 million to the now $160 million announced Friday following the release of new revenue estimates.
The vote comes after 17 earlier public meetings as Utah lawmakers attempt to overhaul the state’s tax revenue to address what they call a “structural imbalance” due to lagging sales tax revenues. Nevertheless, some worried it didn’t go far enough to accomplish that goal.
Beginning with this year’s legislative session that ended in March, lawmakers have been trying to reform the state’s tax structure to deal with lagging growth in sales tax revenues, which aren’t keeping up with income tax collections as consumer spending shifts from goods to services.
Republican legislative leaders have been pushing for a special session ahead of the year’s end, saying Utahns should see less money withheld from their paychecks starting in January if tax reform is finished before the new year. Next year is an election year for all members of the House and half of the Senate.
To help address the imbalance, GOP lawmakers also want to remove the restriction on the Utah Constitution that income taxes can only be used for education — but that isn’t expected to be addressed until the 2020 Legislature convenes in January
Heidi Matthews of the Utah Education Association called the proposal an “incomplete” and “dangerous” bill that sends a “demoralizing message to already overwhelmed” education system in the state by cutting taxes before prioritizing teachers.
“How will this new round of tax cuts impact today’s kindergarten students?” Matthews said. “The reality is we have no idea.”
“Cutting $650 million from the education fund with nothing but an I.O.U. for the general session is not enough for us to bank on,” Matthews said, adding the bill “simply isn’t special enough” for a special session.
Monday’s vote comes the day Jon Huntsman Jr. — who is running to become Utah’s next governor — wrote an op-ed in the Deseret News condemning the proposed restoration of the state’s full sales tax on unprepared food, saying it’s “not the answer.”
Huntsman was governor when he and the Legislature worked for two years to pass a tax reform plan in 2006 and 2007. As part of that reform, Huntsman fought to remove all of the sales taxes from food. It wasn’t removed entirely, but it was slashed.
“As Utahns we should be appalled that the first solution being dredged up is this low-hanging fruit that not only affects all Utahns but is unimaginative and harmful,” Huntsman wrote, calling it an “insurance policy that disproportionally aims the tax at Utah’s most vulnerable population.”
Democrats on the tax reform committee fought against the sales tax on food, as well as the fact it didn’t address education funding.
Republican Rep. Tim Quinn of Heber City also cast a “no” vote, saying he opposed it because he wasn’t a fan of the food tax, but also because he believed it didn’t go far enough to tax services and create the “long-term” reform he said Utah needed.
“If I voted for this bill, I would have to get a shoeshine because my shoes would be scuffed from kicking the can down the road,” Quinn said.
Kristen Cox, executive director of the Utah Governor’s Office of Management and Budget, said the bill isn’t “perfect” but called it a “critical first step” in reforming Utah’s tax code.
“It’s an ongoing process, we need to continue to work, but there’s good policies in here,” she said. “And we love the tax cut.”