Lawmakers eye $100 million tax hike

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SALT LAKE CITY -- Utah lawmakers are mulling over a $100 million tax increase and tapping into the state's rainy day fund.

The discussions come along with a new assessment on the state's revenue situation. The latest numbers indicate Utah will have a $700 million budget shortfall by the time the Legislature convenes in January. That's after lawmakers have already made cuts in the neighborhood of a billion dollars, according to Speaker of the House David Clark.

The Santa Clara republican told KSL News lawmakers are currently weighing all of their options, not just a tax increase or rainy day fund.

"We didn't use our rainy day fund last session. We kept much of it aside," Clark said. "We anticipate using, including the $100 million we set aside for education, [a total of] about $300 million of that solution."

Clark says even after that, Utah would still need to find another $300 million to cut somewhere.

"The equation is you either have to have more revenue coming in--that means taxes--or you have to make sure that you cut your spending," he said.

One possibility: a hike in Utah's tobacco tax. A proposed bill would almost double it to about $1.30 per pack of cigarettes. That could raise $30 million.

The top leader in the Utah Senate says he thinks state senators do support a tobacco tax increase. He calls it a slam dunk.

Other options include an increase in the gasoline tax or re-establishing some of the state sales tax on unprepared food.

Gov. Gary Herbert says he aims to first find efficiencies in government to help make up for the shortfall then possibly look for cuts.

"I'm concerned about any kind of tax increase," Herbert said. "Philosophically, I believe that tax increases dampen the opportunity for the economy to grow. And right now, with the economy just being flat at best, another burden in the form of a tax increase probably ends up being counterproductive."

But advocates for children say raising taxes is a good idea.

But let's make sure that those taxes do not hurt low-income people who are already suffering most in this recession," said Allison Rowland, budged and research director for Voices of Utah Children.

No decisions have been made yet, and they won't be before the legislative session that begins in January. However, the discussions going on now mark the first time lawmakers have put a dollar figure on possible tax increases.


Story compiled with contributions from Becky Bruce and John Daley.

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