Utah governor proposes $1B tax cut, exemption for unborn fetuses

Gov. Spencer Cox talks about his fiscal year 2024 budget recommendations at the Capitol in Salt Lake City on Thursday.

Gov. Spencer Cox talks about his fiscal year 2024 budget recommendations at the Capitol in Salt Lake City on Thursday. (Kristin Murphy, Deseret News)

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SALT LAKE CITY — Utah Gov. Spencer Cox cited the state's nation-leading economy as the engine empowering him to propose some $1 billion in tax relief as part of his fiscal 2024 budget proposal.

The governor's budget plan also includes a new tax credit that would allow an individual or family to claim a double exemption in the year of a child's birth, extending one dependent tax exemption for the child and another for the unborn fetus.

"We believe if we truly are pro-life, and we believe in unborn children, that there should be a dependent exemption for the unborn child as well," Cox, a Republican, said at a budget preview meeting with the Deseret News. "So we are proposing a dependent exemption for moms during pregnancy."

Cox said the exemption would extend to multiple births but did not outline further details. The proposed new exemption has similarities to a federal proposal, the Child Tax Credit for Pregnant Moms Act of 2022, as well as legislation adopted earlier this year by Georgia and another proposal under consideration by Michigan legislators.

"In a practical sense, it's a little hard to administer something like that, so what we would do is give two exemptions for every birth," Cox said. "One for the child being born and one for the pre-birth child."

Cox said the new dependent exemption is just one example of numerous efforts within his latest budget proposal aiming to support Utah families.

We believe it's a fiscally conservative proposal, but also one that meets the needs of the citizens of the state of Utah.

–Utah Gov. Spencer Cox

"We're going to be focused on families," Cox said. "We're seeing birth rates drop precipitously across the country and here in Utah ... and we want to do everything we can to encourage and make having children easier in our state, not harder."

Cox is proposing $300 million in new, ongoing income tax cuts, $574 million in one-time tax relief as well as maintaining the expiration of the basic property tax levy freeze. The governor says the combined proposals will provide more than $1 billion in tax relief to Utah households in the fiscal year that begins July 1, 2023.

A big chunk of that ongoing tax relief, per the governor's proposal, would come from dropping the current income tax rate from 4.85% to 4.75%, a reduction that would save taxpayers some $190 million.

Noting that this basic rate reduction would benefit primarily middle- and upper-income earners, Cox also proposes making $250 of the Taxpayer Tax Credit refundable. According to his proposal, the change would mean a household that has $500 in tax liability that qualifies for the Taxpayer Tax Credit of $750 would get the difference, $250, refunded in a check.

Some $400 million of the governor's proposed tax relief would come in the form of a one-time rebate, aiming to return some of the state's budget surplus back to taxpayers. Under his plan, those rebates would be equal to the greater of $100 or 6% of taxes paid in the previous year. According to data in the governor's budget plan, that would equate to $100 for individuals and households making up to about $39,000 per year and as much as $1,345 for those making more than $178,000 per year.

Cox is also proposing giving taxpayers a one-time rebate on property tax expenditures, recognizing the "astronomical property valuation increases in 2022" that are driving collections projected to exceed forecasts by $127 million. Cox's proposal indicates this rebate, combined with the expiration of the basic levy freeze, will save taxpayers $145 million in the 2024 fiscal year.

While the U.S. economy is just starting to show signs of cooling off following a long run of record inflation and many economists see the potential for recessionary conditions in the coming year, Cox said Utah is well positioned to weather the changes and described his budget as a "recession resilient" proposal.

Utah housing, water, transit and more

"All the markers, every economist we've talked to and all the data shows that Utah's economy is real, and that it really is the best in the country," the governor said. "That's not hyperbole. That's not me being the cheerleader. That's just facts."

"And yet, we recognize we're in a strange time. The Federal Reserve is actively trying to destroy demand. They're actively trying to cool the economy and there are signs that that is working. And we're seeing more layoffs in the tech sector ... something we've never had before," he said.

"But heading into a potential recession … we have an employee cushion. (There are) thousands of jobs open right now that are not being filled so, even if you have some layoffs, there's record hiring at the same time."

Ultimately, the Utah Legislature owns the responsibility for setting the state's fiscal plans but Cox said he's been working closely with lawmakers throughout his budget-making process. He said his proposal was appropriately cautious and prudent but noted the state's record-setting revenues are allowing him to propose funding increases in critical areas while also providing widespread tax relief.

"We believe it's a fiscally conservative proposal, but also one that meets the needs of the citizens of the state of Utah," Cox said. "We feel very good about this. We think it's a generational opportunity both to return money to the citizens of Utah in record amounts but also to provide record funding for education and in many areas that have desperately needed it for several years."

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