Utah Capitol 09

The Legislature’s special Tax Reform Task Force will hold eight public town halls around the state, starting the end of June, to hear citizens and special interests’ concerns about changing how items are taxed in Utah.

“This is not just our (legislators’) problem. This is everyone’s problem,” said Sen. Lyle Hillard, R-Logan, the Senate task force’s co-chair.

The task force will meet in Brigham City (June 25), Salt Lake County (June 27), Richfield (June 28), St. George (June 29), Davis/Weber County (July 8), Roosevelt (July 9), Moab (July 20), and Utah County (July 30).

Weekdays, meetings will start around 6 p.m. On the two Saturday hearings, around noon.

Places will be announced later.

The law creating the task force says that a final report will be made no later than September. And Thursday night, the task force’s first meeting, held in the Senate office building, leaders said they hope for a special session in “late fall or early winter” this year.

The press and others have voiced concerns about why the task force hasn’t met before now. What has been going on?

House Majority Leader Francis Gibson, R-Mapleton, the House co-chair of the task force, said he and Hillyard have been meeting with staff for weeks setting up the town hall schedule and making other preliminary plans.

The general session ends around mid-March each year, and Gibson said lawmakers have families and businesses to attend to. “We take April to unbury us, and come up for breath again.”

But much work has been done behind the scenes.

For example, Legislative budget director Jonathan Ball showed a slide presentation explaining how outdated the state’s tax system has become. You can see it here: https://le.utah.gov/interim/2019/pdf/00002837.pdf

There’s one telling chart. In 1934, when Utah adopted a state sales tax, across the nation 55 percent of all sales were for goods, like cars and groceries.

Only 45 percent were for services, like doctor visits.

By 2018, the national average had drastically changed: 69 percent of every dollar spent went to services, only 31 percent on goods.

In Utah, the 2018 ratio was 66 percent on services and only 34 percent on goods.

But Utah taxes only a few, select services to place the sales on.

So the sales tax growth, while positive in this good economy, isn’t keeping up with demands on the General Fund, which pays for non-education programs.

Utah is alone in the nation in having a constitutional restriction saying all personal and corporate income taxes must go to public (K-12) education or colleges.

This is the last year when any sales tax will be going into public universities. After then, any lagging sales tax revenue will go into just the General Fund, and critical programs like law enforcement, health care, air quality and more will start to run short of adequate revenue.

You may recall that GOP Gov. Gary Herbert and legislative Republican leaders promised at the start of the 2019 Legislature that lawmakers would tackle sales tax reform.

 But HB441 proved too much work, with too many unintended consequences. And late in the 45-day session, the bosses pulled the plug and, instead, set up the task force.

No longer, said Gibson, will only expand the sales tax base to services be studied – like HB441 did.

Ball said there are four general “buckets” that his office sees as solutions to Utah’s tax system problem:

  • Reduce state services and investments.
  • Increase taxes.
  • Change the tax base (like HB441 would have done).
  • Change the constitutional/statute restrictions on where income taxes and other revenue may go.

Gibson said ultimately the task force may pick some of the above alternatives, or come up with new ones.

But fixing the state’s tax system structure will not be put off or avoided, said Gibson. “We need to look long-term, 15 or 20 years” down the road when, if something isn’t done now, the state will be in real trouble financially.

Task force members adopted a general statement of principles, which will be followed to come up with some kind of solution to the state’s revenue problems. You can read it here: https://le.utah.gov/interim/2019/pdf/00002838.pdf

Democrats, as befitting their minority status in the House and Senate, only have two members on the task force.

Rep. Joel Briscoe, D-Salt Lake, at first tried to amend the statement to say the task force would look at where the money is spent – budgeting – to maybe find some savings or renewed priorities.

But Republicans on the panel said their job is to fix the revenue system, not decide budgeting priorities – which is done every general session by various appropriation committees.

If the GOP-controlled Legislature and Herbert try, for example, to amend the state Constitution so income taxes can go to any state program, not just public and higher education, expect a big fight from the teacher unions and other public-school advocates.

Voters would get a say on any constitutional change, which would come in the 2020 general election.

So while there is a real problem with the state’s taxing structure, politics will play a part in any final solution, as well.