Tax cuts appear likely as Utah lawmakers tout rosy economic estimates

SALT LAKE CITY — Utah lawmakers are feeling bullish about passing another round of tax cuts thanks to better-than-expected revenue estimates for the next fiscal year.

Legislative leaders say those estimates will also help "soften the landing" on proposed cuts to state programs that have social services advocates worried.

The latest projections released Friday show Utah has an additional $88 million in ongoing funding, with another $125 million in one-time revenue. That's on top of what was previously forecast in December.

Sen. Jerry Stevenson, R-Layton, who oversees the Senate budgeting process, said this certainly gives state leaders more money to work with. But when asked if it makes this year's budget any less tight, he didn't mince words.

"Not very doggone much. It's going to be very close," Stevenson told reporters. "There's a lot of requests."

Yet, Senate GOP leaders expressed optimism that this year's budget will include another income tax cut for the sixth year in a row. A $100 million proposal calls to cut the tax rate from 4.5% to 4.45%, which is estimated to save a typical Utah family about $45 a year. Senate President Stuart Adams, R-Layton, said he wants to see a cut of "at least" that much.

But some groups are urging lawmakers to skip cutting taxes and instead spend that money on programs that help Utahns afford to live in an increasingly expensive state.

Lawmakers have been predicting a tight budget year since before the session, and leaders at the Capitol asked the spending committees to propose 5% spending cuts to programs under their purview as they considered various spending requests throughout the 45-day session.

The rosier economic picture will likely lessen the blow of those cuts, but Stevenson acknowledged there will still be some "belt-tightening."

"We probably will not use all of them," he said of the recommended cuts proposed by the committees. "We will scrutinize those cuts very closely."

Senate Minority Leader Luz Escamilla, D-Salt Lake City, said there are many social services programs she does not want to see cut at all, while adding she's encouraged by the latest revenue numbers.

"I'm actually very optimistic," she said. "This was really good news."

Regardless of where the state budget ends up, GOP lawmakers have already touted federal changes passed last year through the "One Big Beautiful Bill" that will reduce state taxes by $300 million. But that tax relief doesn't apply to all Utahns, leaders said, which is why some Republicans still want to reduce the income tax rate.

"It didn't go to the majority of the people," Adams said. "We think we need a broad-based tax cut."

There are also proposals to increase the state child tax credit, enhance tax credits for businesses that offer child care benefits to employees and revamp property taxes. Lawmakers appear intent on doing something to provide relief for families with young children, but it's still unclear which, if any, of those proposals will survive.

Legislative leaders will spend the next two weeks hammering out the state budget, including any tax cuts. The session ends March 6.

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