Utah Capitol 18

A GOP-dominated legislative task force will put forward later Friday some ideas on reforming the state’s tax system -- seeking public comment in a hearing next week.

But on three major ideas likely to come forward, Utahn voters -- at least for now -- are opposed to the changes, polling by UtahPolicy.com and Y2 Analytics finds.

Utah voters don’t like the idea of changing the Utah Constitution which now earmarks all corporate and personal income tax for higher or public education, nor do they like increasing the state gasoline tax to support road maintenance and construction.

And they really, really, don’t like the idea of putting the state sales tax back on unprepared grocery store food, which was removed more than a decade ago by the Legislature and former GOP Gov. Jon Huntsman.

The survey was taken earlier this summer, just as the Legislature’s Tax Reform Task Force was traveling the state seeking citizen input.

For weeks now the task force has been holding public hearings on Capitol Hill, going through dozens of ideas about how to shore up the state’s lagging sales tax system.

Earlier this week, GOP leaders in the House and Senate held a press conference where they discussed some of the ideas, which includes a special session before year’s end where taxes overall will be cut, likely by at least $75 million -- money put away in the 2019 Legislature specifically for such tax relief.

Here is the survey results on removing the state constitutional earmark that requires all income tax goes to higher and public education.

Overall, 50 percent of Utah voters are against such a constitutional amendment, and voters would have to approve such a change at the 2020 election.

Utahns also don’t like the idea of increasing the gasoline tax. The talk now is that the current sales tax -- 4.85 percent -- would be added to whatever the price of gasoline is at the “rack,” or the wholesale price from the motor fuels distributor.

It must be pointed out that legislative leaders say this IS NOT a fuel tax hike, it is taking away an exemption put on years ago. It would be up to the distributor whether to pass all or some of that lost exemption to gas retailers, and up to retailers -- as they always have -- to set their own pump prices.

 I any case, such new monies going into the Transportation Fund would allow an equal amount of sales tax money being taken out of road work and put toward other state programs, like public safety and health care.

Y2 finds that 49 percent oppose increasing the gasoline tax (if it is passed on to drivers), 35 percent support it, and 14 percent neither favor nor oppose it.

Finally, lawmakers are also looking at reinstating the full state sales tax on unprepared food, which has been exempt from the tax for more than a decade.

Y2 found in an August survey that 66 percent of Utahns are opposed to putting the sales tax back on food, only 15 percent are in favor, and 19 percent are neutral on the idea.

GOP Gov. Gary Herbert and Republican legislative leaders started out the 2019 general session last January promising real reform on the state sales tax.

But that bill, HB441, got bogged down in special interest opposition and, with time running out, legislators set up the tax force to study the issue over the summer.

While the sales tax is bringing in more and more money each year -- in other words, it is not decreasing -- it’s been clear for decades that the sales tax revenue is not keeping up with income tax take -- mainly because personal services, from Uber rides to haircuts  -- are exempt.

With constitutionally all income tax revenue going into public K-12 schools and universities, the state’s General Fund, mainly funded by sales tax, has been slowly eaten up -- especially when, again years ago, lawmakers put more and more sales tax into roads.

The Transportation Fund is now made up of around $650 million in sales tax, and only a round $500 million in motor fuel taxes.

Herbert and GOP lawmakers say this “disproportional” sales tax situation can’t continue.

And they picked 2019 to come up with fixes.

But 2020 is an election year for all 75 House members and half of the 29-member Senate. So they could face unhappy voters who -- as seen in the UtahPolicy polling -- don’t like specific so-called “tax reform” ideas.

Herbert is retiring at the end of 2020, and isn’t running again. So he could sign any GOP-legislative-approved tax reform without political consequences.

But Huntsman (who made then-Lt. Gov. Herbert governor when Huntsman resigned in 2009 to become ambassador to China) is back in town, having just left his Russian ambassadorship.

Huntsman is considering a run for governor next year -- and he could really make political hay if lawmakers repeal his sales tax off food initiative, and two-thirds of voters agree with him that it should stay.

Voters in November 2018 killed a ballot measure that, in a convoluted manner, would have raised the gas tax for schools. So that will be a hard sell in a special session, too.

And you could certainly expect the UEA -- the main teacher union -- and other pro-public-school advocates to oppose any attempt to repeal the constitutional income tax earmark at the 2020 polls.

In short, while it may be a really good government financial move for GOP lawmakers (don’t expect much Democratic help) to reform sales tax in Utah, the Republican legislators may well be swimming against public opinion in a special session next month even if they give a $75 million tax cut along the way.