Tax ideas floated to fix budget shortfall

There must be a billion ways for state government to raise $1 billion to balance the budget, with various groups floating a raft of potential tax increases.

But what appears to be in short supply is the Legislature's appetite for raising taxes while the economy is getting to its feet and some believing there is still fat to cut.

"Tons of it," says Sen. Howard Stephenson, R-Draper, president of the Utah Taxpayers Association. "There's ample room to cut budgets without raising taxes."

Former Gov. Norm Bangerter, who nearly lost re-election after raising the income and sales tax during his first term in office to balance an embattled budget, said the projected deficit of as much as $850 million today is far more daunting .

"I think everything is going to have to be looked at as alternatives to the way we're doing things today. You just cannot get around it," he said, although he said any tax increases need to be targeted.

"I don't think we can stand a general tax increase like I did when I was governor," he said.

While people are not terribly forthcoming with recommendations to cut, there are plenty of ideas on where the state could find more money.

At a Sutherland Institute forum Thursday on budget cuts -- where no budget cuts were actually discussed -- Salt Lake Chamber of Commerce President Lane Beattie laid out eight different tax increases that the chamber has discussed, although not yet formally endorsed.

They range from a $160 million restoration in the sales tax on food to a $12 million tax on coal.

"I do not know of a time, certainly in the 25 years that I've been involved, when the need for government services has been higher with less effort going into it," said Beattie, who is a former Utah Senate president.

In the past, the chamber has supported a 10-cent per gallon gas tax increase that is again under consideration along with a recommendation that it be indexed to ensure automatic future increases.

He said the chamber is "terribly concerned" about shortchanging public schools and higher education and suggested that the Legislature take a hard look at the gas tax, as well as recommending lawmakers consider eliminating certain tax breaks for the oil and gas industry. The gas tax increase could bring in $100 million and the severance tax, $160 million.

The chamber isn't the only group suggesting an array of tax increases be considered.

The nonprofit Voices For Utah Children, which advocates children's health care and quality of life, put forward other options, including levying a higher income tax on those making more than $250,000 per year.

An additional 1 percent tax on those making up to $1 million and 2 percent for those making over $1 million could generate $217 million per year, according to Allison Rowland, budget researcher for the group.

"These are ideas where revenue could be raised in a quick way that does relatively little harm to the economic recovery," said Rowland. "A 1 percentage point increase in income tax for someone who earns more than $250,000 per year is not going to cause families to go hungry, is not going to cause homes to get foreclosed on."

Voices has also suggested imposing a tax on services -- like accounting and legal services -- that are now exempt. It was an idea that then-Gov. Jon Huntsman Jr. expressed support for earlier this year and would generate an estimated $880 million.

Anti-smoking advocates are optimistic they will see a tobacco tax increase, potentially pushing the cigarette tax up to $2 per pack, generating as much as $76 million.

And a hospital bed tax -- beaten back in previous sessions -- may once again make an appearance.

All of this comes despite the insistence from Gov. Gary Herbert that his budget proposal, due out in December, will not call for a tax increase.

"With Governor Herbert issuing his no-tax pledge, it would be very surprising for the Legislature not to go along with that," said Stephenson. "There may be these sin taxes, but I don't believe there's a mood in the Legislature for raising taxes."

Rep. Ron Bigelow, R-West Valley City, House chairman of the Legislature's budget committee, said at some point the public will let lawmakers know they've had enough cuts, but he doesn't think we're there yet.

"The state of Utah generally will not support major tax increases at this point," he said. "When they've decided we've cut public education enough, they will let us know and it will be very apparent."