Utah Capitol 29

Utah GOP legislative leaders are looking to give citizens a $160 million-plus income tax cut next year -- double the size they were talking about just a few weeks ago.

UtahPolicy.com is told that the larger tax cut is coming because of increased savings in state department budgets -- pushed by GOP Gov. Gary Herbert -- and by very good revenue projections over this and next fiscal years.

Friday evening Herbert and leaders issued a press release saying new revenue updates show $482 million in new ongoing tax revenues for next year and about $200 million on one-time tax surpluses.

Added together, it means that the state has around $682 million in new tax growth -- and that will allow for the $160 million in a tax cut.

More than half a billion dollars, more than tax surpluses and growth than was in the 2019 Legislature.

While a final decision on when to call an expected special session will wait for official action at a Monday night meeting of the Tax Reform Task Force, sources tell UtahPolicy.com that the special session will be Dec. 12 (as reported previously by this political newsletter).

One large tax reform bill will be considered, sources say.

What won’t be on the Dec. 12 agenda is a “reform” in how public education will be guaranteed tax monies to pay for annual student growth and inflation (as also reported in UtahPolicy.com).

The larger tax cut is good political news for legislative leaders who are pushing tax reform before Jan. 1 -- the start of the income tax year.

The cut will mean that few, if any, individual taxpayers will be left out of tax reform.

A previous “spot graph” reflecting how the 1.5 million individual income taxpayers would be treated under one previous tax reform plan showed that up to one-third of Utah tax filers could see an actual tax increase -- although most of those would have seen a small tax hike overall, a few dollars annually.

But with the larger income tax cut coming, those numbers are greatly reduced. And, sources said, considering how much unprepared food those folks buy, their tax burdens could have even been less.

The result: Almost everyone now will get tax relief.

GOP legislative leaders met Thursday with Herbert. The meeting went well, two sources said, with some items the governor was worried about being taken care.

Overall, Utah’s good economy and continued work to find spending savings within state departments will allow for the doubling of the tax cut.

UtahPolicy.com reported weeks ago that some leaders were looking at a $100 million tax cut, at least.

But now the tax cut can be even larger.

This is good political news for leaders, who have been criticized by any number of Utahns -- including some Republican officeholders -- for looking at tax reform this year that includes putting the whole state sales tax back on unprepared food and taking away the sales tax exemption on wholesale gasoline, which likely could lead to higher prices at the pump.

Combined with a $125-per-person refundable income tax credit for low-income Utahns, to offset the higher food tax, the increased income tax cuts should mean regular citizens will see more money in their pockets, GOP legislative leaders say.

“Our work is not done,” Utah House Speaker Brad Wilson, R-Kaysville, told UtahPolicy.com Friday.

There had been some talk that the overworked task force would continue into next year, even beyond, looking to “tweak” the state tax structure further.

But the task force, which held 18 public meetings since the spring, some going four and five hours, will end as planned.

Instead, the revenue and tax committees of the Legislature will be told to further investigate how the tax system can be worked to reflect the changing tax universe, said Wilson -- especially any number of services now not being taxed.

Even though a revised tax reform bill will be released Friday afternoon, in preparation for the Monday meeting, GOP leaders have been meeting in small groups with their House and Senate caucus members for several weeks now, and it is believed that there are the votes there to pass the bill in a Dec. 12 special session.

There are 59 GOP House members, and it will take 38 votes to pass the bill. In the Senate there are 23 Republicans, and 15 is a majority.

So, some House and Senate Republicans, who may be in swing districts and vulnerable to any tax reform votes, can still vote no, and the reforms will still pass. Herbert is on board to sign the bill into law, and the tax changes can take effect in January.

GOP leaders are not expecting any Democratic votes, although they would be welcomed. The minority party in the House released a dead-on-arrival alternative tax reform plan this week, and may introduce such a bill in the special session. It won’t pass.