Lawmakers will hold the first meeting of the tax reform task force next Thursday evening at the Utah State Capitol.
Overhauling the state’s tax code is not a light undertaking, but Gov. Gary Herbert says he’s confident lawmakers are up to the task.
“It’s important that we do this correctly. This is causing some anxiety and there’s probably been a misunderstanding as far as what we intend to do and the cause of the problem,’ he said at his monthly KUED press conference.
The problem is complicated, but at its core, there exists an imbalance in the state’s tax system. Constitutionally, all income taxes are earmarked for education, while the rest of the taxes the state collects goes toward everything else. The state’s income tax collections have been growing, leading to a surplus of more than a billion dollars this year. However, sales tax collections have been falling. That imbalance is threatening the state’s ability to fund basic government services.
“There is a sense of urgency that the status quo will have certain ramifications in the next three to five years down the road. Our general fund will cease to be able to fund what we will need to do for general fund purposes,” said Herbert.
House Majority Leader Francis Gibson, R-Mapleton, is the House chair of the task force. He says the panel will hold town hall meetings in 7 or 8 locations around the state as they seek a solution to the imbalance. Gibson says he would like to take the tax reform road show to places where residents don’t normally have access to legislators.
“We’re trying to head to communities that don’t always have legislators come and visit so we can hear their ideas, too,” he said.
One of the possible solutions that lawmakers are considering is eliminating the constitutional requirement earmarking income taxes for education. That would require the legislature to pass a proposed constitutional amendment, which would then need approval by voters.
“Will that (eliminating the earmark) be part of the solution? Potentially. It will be on the table as part of the discussion,” says Gibson.
Herbert would not take a position on the elimination of the income tax set aside, but he said earmarks sometimes let lawmakers avoid making hard decisions.
“They don’t want to have to debate and prioritize and discuss what’s the best thing to do this budget cycle, which may be different than the last budget cycle and different in the future. Having that discussion is important. I’m more than happy to eliminate restrictions on how we prioritize money and leave it up to the legislative body.”