The Utah Legislature recently passed a sweeping overhaul of the state tax system during a special session earlier in December. Utah Gov. Gary Herbert signed the bill into law shortly after. Two Summit County legislators give their take on the bill.
House Minority Leader Brian King, who represents a portion of Summit County, and Heber-based Republican Rep. Tim Quinn don’t often agree on policy issues. But the two both cast “nay” votes against the tax bill at the Legislature’s Dec. 12 special session. The legislation, sponsored by the tax reform task force chairs, reduced the income tax rate and provided some income tax credits; raised taxes on groceries and gas; and added sales tax to some services.
King says he was bothered by the increased sales tax on food and its impact on low-income Utahns. He’s also concerned about the income tax reduction, as income tax revenue is currently set aside for the education fund.
“Our state constitution requires that all money raised for our income tax, whether it's paid by corporations or individuals, goes into the education fund," King said. "It's allocated specifically for not just public education but for higher education. So it was troubling to me that we had such a significant reduction—several hundred million dollars a year in reduction—for how we pay for education in this state.”
Last session, Quinn ran a tax reform bill of his own—one that lowered the sales tax rate and expanded it to many services, to shore up a diminishing general fund. When the bill failed, the legislature created the task force to look at options for modifying the tax code. Quinn says the task force started with a mission to update the tax structure to accommodate the growing service-based economy. That didn’t happen in this bill. While food and gas sales taxes add revenue in the short term, Quinn says the legislature has hung its hat on declining commodities.
“We buy way more prepared food than we used to and less unprepared food," Quinn said. "I got some statistics from the federal government, and over the next 10 years we're going to lose 23% of the revenue that we receive off of tax, whether it be an excise tax or sales tax, on gasoline. That's hundreds of millions of dollars that we're going to be without, just in the next decade, because of fuel efficiency and the advent and I think migration towards EVs [electric vehicles], so all we've done is buy ourselves time.”
Quinn also takes issue with the process. He says the tax task force was assured by other members that more than $500 million shifted from the education fund to the general fund would be used to pay for higher education. Quinn says that’s just not true.
“We are not going to spend $534 million on higher education," Quinn said. "That is an appropriations bill, as Rep. King knows better than I do. I believe that once we get in there, we're probably going to be looking at $350 to $400 million of that money going to higher education, therefore affecting public education to the tune of $150 to $200 million in the negative. I don't think it was presented well. I don't think it was altruistic in the way it was presented.”
One factor that was left out of the bill was a constitutional amendment to unmark income tax for education. The amendment would require approval by two-thirds of the state Senate and House, then majority approval by voters. King says legislative leadership plans to address it in the general session, though he’s not sure what would replace the current earmark.
“There may very well be something that passes for a November vote that removes the earmark and puts something else in place to provide greater assurance, or provide some assurance, that education funding is going to be increased or at least maintained,” King said.
Looking ahead to the 2020 general session, both King and Quinn foresee legislation arising that proposes changes to the recently passed tax bill. The legislative session begins Jan. 27.