Don’t expect lawmakers to consider any sort of significant tax hike in the next few years.
House Majority Leader Brad Wilson, R-Layton, said Tuesday at the Utah Taxpayers Association annual “Taxes Now” conference he does not think the legislature will do much on taxes, except for perhaps addressing sales and gas taxes.
“The income tax die is cut,” said Wilson. “We’ve set property taxes for the next five years. That means tax increases won’t discussed in the legislature in the next few years.”
What Wilson says does carry some weight, since he’s the odds-on favorite to succeed Greg Hughes as the next House Speaker next year.
But, what happens if Utah hits an economic downturn? Economists say it’s not a matter of “if” but “when” we hit another recession. That may be sooner than you think, especially since Utah is currently in the second-longest economic expansion in history. Wilson says there probably won’t be serious consideration of a tax hike if that comes to pass.
“I think if we have an economic downturn which will come at some point, we’ll do what we did a decade ago, which is we’ll tighten our belts and try to make tough decisions and try to be more efficient,” says Wilson. “We are in the top 20 in terms of overall tax burden, maybe even a higher rating than that, which is not necessarily the kind of place you strive to be.”
As you’ll remember, lawmakers were able to cut personal income taxes during the 2018 session by .05%, dropping the rate from 5% to 4.95%, which isn’t much in the grand scheme of things. The cut was necessary to balance out a change in the federal income tax that would have resulted in a slight tax increase on residents.
“Tax cuts are fun, easy things to vote for,” says Wilson. “The other stuff is more difficult.”
That “other stuff” included a move by lawmakers to stabilize school funding in Utah, voting to freeze the basic levy on property taxes and equalizing that money across school districts, which will have the net effect of boosting public school funding at the local level. Also, lawmakers cut a deal with the backers of the “Our Schools Now” proposal to place a non-binding question on the 2018 ballot asking residents if they would favor a gas tax hike that would ultimately boost school funding.
Wilson says he’s pleased lawmakers were able to address what has become an urgent issue. Now, it’s up to schools to figure out how to use that extra funding.
“We run an unprecedented number of education bills year after year, and we don’t seem to be able to solve that problem. Now, there’s more money for education. It’s never going to be enough, but the fight over that will be less intense. Now, the education system is going to have to figure out how to best use this money to try and improve outcomes,” he said.
Utah’s economy is roaring right now with low unemployment and a blistering job creation rate that leads the nation. But, there are some dark clouds on the horizon.
Utah’s urban population is set to double in the next 20 or 30 years, which is just mind-boggling and will present some major challenges for lawmakers as they grapple with how to deal with that explosive growth.
“It’s the biggest challenge we face in every way,” says House Majority Leader Brad Wilson, R-Layton. “We’re already one of the most urbanized areas in the country between Weber County and Utah County, and it’s going to double. It’s just crazy to think about.”
Wilson says he’s primarily worried about whether living in Utah will be affordable because of that growth, and making sure the state’s transportation infrastructure can handle that growth.
“That planning work is what the legislature is going to have to become a lot better at,” he says. “When you get to the point where every little decision makes a huge difference in terms of quality of life and affordability and growth.”