As if the coronavirus hasn’t screwed up the state’s budget bad enough, now this: If the Trump administration goes through with plans to delay the April 15 federal income tax filing deadline, it could push “hundreds of millions of dollars” in state income tax receipts into the next fiscal year, making the current year run badly into the red.
“The last day of the” 2020 Legislature “and now we may not know” the current year’s revenue impacts, House budget chairman Brad Last, R-St. George, told UtahPolicy.com Thursday morning.
The new budget year starts July 1, with most 2019 income tax revenues coming in well before then.
The Trump news, coming in a Wednesday night address, hits the final day of the session, which ends at midnight Thursday.
Lawmakers have already passed their half-dozen budget bills, leaving GOP leaders and budget staff scrambling Thursday looking for a way to mitigate the pending revenue problem.
One out would be to keep the state income tax April 15 deadline. Then filers would have to file their state income taxes, even if they didn’t file their federal returns on that day.
But, Last noted, many Utahns base their state taxable income based on their federal taxable income -- and if they don’t bother to determine their federal numbers, then they don’t have their state numbers.
In short, this could be a really big mess.
“There are a few things we could do to minimize the impact,” said Sen. Jerry Stevenson, R-Layton, who is co-chair of the top budgeting committee. “But, this could really mess things up as we look ahead to this year.”
Stevenson said the first move lawmakers will take is to have the Executive Appropriations Committee sign off on beginning any new building construction to make sure the money is available. That should give lawmakers enough flexibility in the budget in case those tax revenues are not available.
Of course, legislators could come back into a special session to deal with the fallout if Trump does give a federal income tax vacation.
Utah lawmakers passed Wednesday a bill that gives four instances -- including a state of emergency as called by the governor -- where the Legislature could meet remotely, debate bills and vote on them. But such a system has not been drawn up or tested, GOP Senate leaders told reporters Wednesday.
The individual and corporate income taxes bring in around $4.5 billion a year into the Education Fund, which, as of now, can only be used for higher and public education.
“This is our school budget,” said Last, and thus critical to a major part of state and local school districts funding.
Putting off the April 15 deadline could delay bringing in “hundreds and hundreds of millions of dollars,” said Last.
Lawmakers have already ditched plans for any tax relief this year, instead opting to put money away in case the economy dips. Last year, legislators allocated $80 million for anticipated tax cuts that went by the wayside after the tax reform bill was repealed in early January. There had been talk of using $15 million of that for a social security tax cut, but that was nixed after Republicans in the Senate felt it was more prudent to save that money to fill in any gaps in the budget that could occur due to a worsening economy.