Another income tax cut is going to cost more. So what will the Utah Legislature do?
The price tag for the tax cut endorsed by Utah’s Republican state lawmakers has gone up.
Lowering the state’s income tax rate from 4.65% to 4.55% for individuals and corporations had been expected to reduce revenues coming into Utah coffers by $160 million annually, the amount set aside by legislative leaders for a tax cut.
But now that Utah expects to collect more tax dollars in the coming budget year, the lower rate would mean nearly $170 million less yearly from state taxpayers, according to an updated fiscal note posted Wednesday.
“It changed because of the budget update,” said Sen. Chris Wilson, R-Logan, about the new cost of his tax-cut bill, SB69, that has already passed the Senate but has yet to have a hearing in the House.
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The Legislature’s Executive Appropriations Committee is scheduled to meet at 6 p.m. Friday to come up with supplements to the $28 billion base budget already approved for the budget year that starts July 1.
Between now and then, legislative leaders are working out the details of what will — and won’t — get funded before the session ends March 1. As a top priority of the GOP supermajority, a tax cut is on the list to be funded.
What’s not clear, however, is exactly what that tax cut ends up looking like.
Before Friday’s new revenue estimates were released showing the Utah Legislature can anticipate another $340 million, Senate President Stuart Adams, R-Layton, had said the size of the tax cut could fall to $120 million or rise to $200 million.
Senate Budget Chairman Jerry Stevenson, R-Layton, told the Deseret News the income tax rate reduction to 4.55% is all but set in stone at this point.
“I think we’re finished with that. I think the tax deal is done,” Stevenson said, adding that dropping the rate any more “isn’t going to happen.” But, he acknowledged it will take close to $170 million to cover the revenues lost with a 4.55% rate.
“It doesn’t change things,” he said. “It’s just calculations.”
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House Speaker Mike Schultz, R-Hooper, hasn’t signed off yet, said Alexa Musselman, Utah House majority spokeswoman
“Speaker Schultz absolutely supports a tax cut, but we are still in discussions on what that looks like,” Musselman said. She said the speaker’s weekly media availability on Friday is canceled due to scheduling conflicts and budget discussions.
House and Senate Democrats have come out against a tax cut this year.
The $340 million in additional revenues projected are split between another $126 million in ongoing revenue growth and $214 million more in one-time or surplus funds. The new estimates come after nearly $638 million in revenue increases were forecast late last year.
Then, the Executive Appropriations Committee approved setting aside nearly $600 million for the $160 million for a tax cut as well as a salary increase for state employees and infrastructure projects.
