Will the Utah Legislature cut taxes again this session? See what Republican, Democratic leaders want to do
- Oops!Something went wrong.Please try again later.
A tax cut is on the agenda for the Utah Legislature’s Republican supermajority again this year, but Democratic lawmakers aren’t interested.
Late last year, $160 million was set aside for what is expected to be yet another reduction in the state income tax rate, but it doesn’t look like anything will happen until new revenue estimates come in next month.
“We’re early in the session, but we’re going to do everything we can to try to return money back to the taxpayers,” Senate President Stuart Adams, R-Layton, told reporters Wednesday, promising lawmakers will “measure twice and cut once” before taking any action.
Related
“We’re going to be responsible and look to the future,” he said during the Senate’s daily press conference. “Those tax cut decisions probably won’t be made until we get those final numbers and find out what our revenues projections are, and what our needs are.”
Only then, the Senate leader said, will lawmakers consider a tax cut. Although he said a tax cut is definitely “on the table” for the 45-day session that got underway Tuesday, it’s still a question of “if and when we do it.”
Senate Budget Chairman Jerry Stevenson, R-Layton, stressed it’s “not a decision that’s going to be made very quickly.”
But House Speaker Mike Schultz, R-Hooper, left little room for doubt about where he stands on reducing taxes.
“This is Utahns’ money and it belongs in their pockets,” the speaker said in a statement to the Deseret News.
“Utahns are feeling the impacts of inflation and we are committed to doing all we can to curb those pressures. Over the past three years, we’ve put $1.2 billion back into the pockets of hardworking Utahns, and we have no intention of stopping there,” Schultz said.
The Democrats rolled out their legislative agenda Tuesday, including what they called “innovative” tax policy but the minority leaders of both the House and Senate said their caucuses are opposed to the GOP plan.
Related
“We’re talking about having an income tax cut but yet we’re not seeing the need in social services going down. None of us want to turn away people, especially the individuals who are really, really on the margins,” said House Minority Leader Angela Romero.
Those are the people who “need the support of us, the state Legislature,” the Salt Lake City Democrat said, describing the party as standing “for all Utahns. We do not want to leave anyone behind and we don’t want to erase anyone.”
Senate Minority Leader Luz Escamilla, D-Salt Lake City, brought up the nearly $50 million shortfall in the state budget year that ended June 30, the result of lower than anticipated income tax collections.
“We are not in support of any tax cut especially with our current estimated budget situation,” Escamilla said.
House Minority Caucus Manager Rosemary Lesser, D-Ogden, also raised revenue issues.
“Historically, when you look at tax cuts in Utah, they do not come one after another after another. Typically, it will be over the decade there may be a tax cut, (then) a little pause,” Lesser said, a chance to equilibrate based on revenues.
“The revenue stream has been so variable based on COVID and so forth,” she said. “It seems to me that having two, three consecutive years of tax cuts doesn’t really allow us to let our revenue sources settle and figure out where they’re going to be.”
Senate Minority Whip Kathleen Riebe, D-Cottonwood Heights, told reporters at the Senate availability Wednesday that “as Democrats, we recognize we don’t have the votes to actually impact” legislation backed by Republicans.
But, she said, “we do have an obligation to our constituents, who are asking us to use that money to solve some of the problems that we still have, and the challenges in the state,” such as long waiting lists for Medicaid, housing and special education.
“We don’t really feel like the tax cuts makes enough of an impact on people’s pocketbooks,” Riebe said, given the issues that could use more funding.
Stevenson, however, said lawmakers “have to decide whether we’re dealing with needs or wants.”
Adams added that he expects there will be “a lot of discussion” about a tax cut, and that he believes lawmakers have done a good job of coming up with more money for education and other needs while still reducing taxes.
The state’s economic situation has been described by legislative analysts as undergoing a shift from boom to balance now that federal funding to offset the economic impact of the COVID-19 pandemic has ended.
The Senate president acknowledged he’s concerned about the state budget growing faster than inflation and population and said government agencies are being asked to look for “efficiencies” as they put together their base budgets.
Related
Adams said he agrees with Gov. Spencer Cox it’s time to look at getting rid of the state income tax. Cox said recently he’s ready to talk with legislative leaders about relying only on sales and property taxes rather that just “slicing away” at the income tax rate.
That would mean a shift to a “two-legged” tax structure dependent only on sales and property taxes, which now largely go to local governments. In 2020, Utah voters rejected legislative tax reform that raised sales taxes on food, gas and some services.
“It would take a lot of effort on sales tax,” Adams said, but added he believes it’s best to tax consumption and eliminating the income tax would lead to “a stronger economy long term.”
Riebe said there’s already concern being expressed in budget hearings by some educators about the impact on property taxes in rural parts of the state if the income tax goes away.
The Senate president said the Legislature has been working towards eliminating what he sees as a tax on production since Gov. Jon Huntsman Jr. pushed for a single or flat income tax rate of 5% nearly two decades ago,
“We’ve been doing it for years. We’ve been taking chunks of the income tax down for years,” Adams said. Last year, the Legislature dropped the individual income tax rate from 4.85% percent to 4.65%.
“We act responsibly,” he said, noting he’s not aware of any effort to attempt to wipe out income tax this session. “We’re not going to jump into something we can’t do. But we’re going to continue to work on it.”
