Tax referendum 01

On Thursday Governor Gary Herbert and legislative leaders announced they planned to repeal the controversial tax reform in the face of a referendum effort to overturn the bill at the ballot box. A new poll shows that referendum effort would have likely succeeded.

The Dan Jones & Associates survey obtained by UtahPolicy.com shows 57% of Utahns said they support the referendum effort, while 35% were opposed. The poll was conducted January 6-15, 2020 among 604 likely Utah voters with a margin of error of 4 percent.

Referendum backers said they had turned in more than 152,000 signatures, far more than the 115,869 they needed to qualify for the ballot. As of Thursday morning, more than 81,000 of those signatures had been verified.

The polling results suggest the referendum likely would have passed in November and could have made things difficult for some Republican legislators who voted in favor of the reform effort when they were up for re-election in November.  

Legislative leaders threw in the towel on the tax overhaul effort on Thursday, saying they will repeal the bill that was passed during a special session in December. The bill provided a large income tax cut, but raised sales taxes on a number of services and restored the state portion of the sales tax on food to shift the tax revenue from the education fund to the general fund.

It’s that last part that legislative leaders are focused on. House Majority Leader Francis Gibson, R-Mapleton, said he’s frustrated that they now have to start over to fix the problem of general fund revenues not keeping pace with the state’s needs.

“The referendum process works and the supporters of the referendum did their part. Taxes are not easy and it’s not easy to explain,” said Gibson.

Gibson continued, “I have consistently said we do not have a money problem in the state of Utah we have a problem of how revenues are distributed.”

Utah’s constitution requires all income taxes from individuals and corporations to go toward public and higher education. Sales taxes fund mostly everything else. The problem, according to legislative leaders, is the sales taxes are not growing fast enough to keep up with the needs of the state, while income taxes are volatile fluctuate with the economy. When times are good, like now, income taxes are up. When they’re bad, they can fall, which means less money for education.

The tax reform effort, which ate up most of the summer and fall with town hall meetings around the state and public hearings, is now back to square one.

“Even though there was more discussion and public participation on this bill than any other bill I have ever seen or been a part of apparently there was still not enough communication from the legislative branch as to what this bill was,” said Gibson.

It’s not clear what’s next for the tax reform effort. Lawmakers may be loath to reopen the issue during the 2020 session after the successful referendum push.