A legislative task force made little measurable headway in their effort to find consensus on tax reform Monday, facing a wave of overwhelmingly critical public comment and postponing a vote on recommendations despite the desire of Utah government leaders to hold a special session next month.
Task force members debated a series of potential tweaks to their draft legislation, aimed at providing overall tax cuts to a larger number of Utah taxpayers, while pressing for additional data, detail and clarification before moving forward on a policy shift.
“It just seems to me that we haven’t dug into the details of what’s being proposed,” said Keith Prescott. “We haven’t done any analysis. I think Utah deserves better than this.”
The legislative panel was also given a preliminary description of a potential framework for education spending. Sen. Ann Millner, R-Ogden, said the proposal would tie school funding to enrollment and inflation growth — with supplemental state funding used to equalize property tax disparities between school districts — and would replace current constitutional language restricting all income tax revenue to public and higher education.
“It would establish a [funding] floor that’s more stable,” Millner said, “that people can depend on.”
The reform discussion began earlier this year, with legislature leaders warning that sluggish sales tax growth was creating a structural imbalance in the state budget next to the more robust, and restricted, income tax.
Lawmakers originally looked at broadening the sales tax to include service-based businesses — coupled with income and sales-tax rate cuts for an overall decrease in tax receipts — and opted to create the task force after that original effort fell short during the 2019 legislative session.
But over months of task force hearings and discussion, the tax reform effort has shifted away from services — although some are included in the current draft legislation — to a proposal that would increase the sales tax on food and gasoline sales, while creating new earned-income and grocery tax credits to mitigate the impact on low-income Utahns.
Legislative leaders have also signaled an intent to remove the restriction on income tax spending, which would require a ratifying vote of the public.
But on Monday, task force co-chairman Sen. Lyle Hillyard, R-Logan, said the limited number of services remaining in the tax proposal is a “weakness," as consumer habits are increasingly shifting away from traditional sales.
“I think we’re failing by not including more services in the taxes," he said, “that’s what we really need to do.”
A capacity crowd led to more than three hours of public comment, with nearly all who spoke objecting to the draft legislation, urging lawmakers to delay reform until next year’s general session, or both.
“The devil is always in the details,” said Brett Hastings, co-founder of Utah Legislative Watch, “and the details of this bill just have not been vetted well enough.”
Steve Hiatt suggested the proponents of tax reform have never experienced the immediacy of poverty. The tax reform proposal might include tax credits, he said, but families living paycheck to paycheck are not able to wait to receive an annual return.
He also questioned the services included in the proposal, particularly the taxes that would be levied against streaming, ride-sharing and dating services.
“You’re taxing both ends of ‘Netflix and chill,’” he said. “Three times if you count the Uber home in the morning.”
And Michele Jones, a high school math teacher, questioned the characterization of some task force members that education would be “held harmless” by cuts to the income tax and, potentially, an constitutional amendment.
“You’re balancing the budget on the back of our students,” Jones said. “You’re moving money around to fix a sales-tax problem — which is a real problem — and you’re making our students pay for it. And I think that’s wrong, I think that’s morally wrong.”
While Monday’s hearing was at one point the final scheduled meeting of the task force, co-chairman Rep. Francis Gibson, R-Mapleton, announced that an additional hearing will be held on Dec. 9.
