After months of debate and public meetings, the Utah Legislature passed a sweeping tax reform package on Thursday evening, despite vocal opposition from many members of the public.
The Republican-controlled Senate approved the measure 20-7. The bill passed the GOP-dominated House by a 43-27 vote. No Democrats voted for the bill.
Usually, it takes a 2/3 vote to make a bill take effect immediately once the governor signs it into law. The House failed to clear that threshold, but lawmakers amended the measure so that the tax cuts will take effect retroactively.
Lawmakers only made the final bill public with about an hour to go before lawmakers were expected to take a vote on the measure. The new version has a net $155 million tax cut, slightly down from the $160 million cut proposed last week. That big cut is fueled by a budget surplus projected to be in the hundreds of millions of dollars next year.
The most current version of the proposal provides a “pre-bate” of sorts for Utahns with dependents, who would receive a check of up to $200 dollars in February or March of next year. Lawmakers had nixed an earned income tax credit for low-income Utahns in the third version of the bill, but put it back in in the fourth version. The provision will provide $6 million in tax credits for lower-income Utahns.
Sen. Lyle Hillyard, R-Logan, spent more than ¾ of an hour summarizing the bill on the Senate floor. He forcefully pushed back against critics who say the tax reform bill was rushed, saying he and other members of the task force put in countless hours working on the legislation.
“I have been almost a full-time legislator most of this year. We’ve traveled the state, held 8 town hall meetings, and heard from hundreds of taxpayers. You will never get this kind of discussion about a bill during the general session,” he said.
One of the more controversial parts of the bill restores the state portion of the sales tax on food. To mitigate the increased cost of food on poorer Utahns, the state is offering a refundable tax credit of $125 per person, up to $500 per family. Some of those lower-income Utahns will see a portion of that refund in July of next year so they don’t have to wait until 2021.
Sen. Todd Weiler, R-Bountiful, said the original move to remove the sales tax on food did not make a noticeable impact in improving the welfare of poorer Utahns, meanwhile the state budget for social services doubled.
“Are the poor better off today than they were when we originally did this,” he said.
The bill also removes a number of sales tax exemptions currently in state law, including tickets for college athletic events, some types of car washes and newspaper subscriptions. Additionally, the proposal adds sales taxes on a number of services that were not previously subject to sales taxes, including ride share services such as Uber or Lyft, streaming entertainment services like Netflix or Hulu, pet boarding and grooming, parking lots and automobile towing services.
The bill also removes a sales tax exemption granted to gasoline manufacturers. The money collected from imposing that sales tax would fund transportation needs. $5 million of the money generated from removing the wholesale fuel tax would be earmarked to improve roads in some rural counties.
Left out of Thursday nights bill was an effort to remove the constitutional requirement that all personal and business income taxes go to fund public and higher education. Several Republicans say eliminating that constitutional requirement would give them more flexibility in the budgeting process. But, since it’s a constitutional amendment, the provision would take a ⅔ vote in both houses followed by passage from voters during the 2020 general election.