Utah Capitol 18

Several sources tell UtahPolicy.com that legislative leaders are targeting December 12 for a special session on tax reform.

Legislative leaders have told lawmakers if they can garner enough support for a tax reform bill, they will ask Gov. Herbert to call the special session next month. Several lawmakers UtahPolicy.com talked to said the date most likely for the session is the 12th, but that’s not yet for sure.

Sources who spoke on condition of anonymity, as they were not authorized to speak publicly, told UtahPolicy.com that legislative leaders feel the three weeks between now and the potential session date is sufficient to build support for a consensus tax reform proposal. 

Lawmakers are also hoping to pass a constitutional amendment to would remove the requirement that all income taxes go toward education. However, removing that earmark may run into fierce opposition from education stakeholders who will be reluctant to kill a guaranteed source of funding for schools.

As UtahPolicy.com first reported, as a trade-off for eliminating the constitutional requirement for education funding, lawmakers are working on a proposal to allow local entities to boost school funding by tying property tax increases to the economy. That would most likely be some form of the consumer price index, allowing property taxes to increase slightly every year without the need for a truth in taxation hearing. There would also be caps in place to ensure property taxes don’t rise too quickly. If a local entity wants to raise property taxes beyond the slight boost, they would still be required to go through the truth in taxation process. To ensure that property taxes don’t favor wealthier school districts over poorer ones, the proposal would have a measure to equalize funding throughout the state.

In addition to empowering local entities to contribute more to education, legislators are also eyeing some guarantee for education funding on the state level. That could take the form of a constitutional amendment that guarantees full funding for the growth in public education as well as tying increases in per-pupil funding to the economy. 

UtahPolicy.com is told many elements of the tax overhaul or education funding proposals may not be in place until the session.

The tax reform task force released its latest proposal on Friday ahead of a scheduled meeting on Monday. The new draft calls for a $77 million tax cut for individual taxpayers in Utah instead of an $80 million reduction in previous plans. Also, the recommendation drops the income tax rate for all filers from 4.95 percent to 4.64 percent. 

One of the more controversial elements in the draft restores the state portion of the sales tax on food, coupled with a refundable income tax credit for low-income Utahns to make up for the increased price of food. 

The tax reform draft also places sales taxes on several dozen services that are not currently taxed. Several tax exemptions now in the law would be repealed.

Lawmakers have been seeking to overhaul Utah’s tax system since the 2019 session when they abandoned an effort to expand the tax base and pushed the effort off to the current task force.

Monday night, the tax reform task force will discuss the latest draft proposal. They’re also slated to hold their first public discussion on removing the constitutional earmark for education funding.