No, they’re not economists or accountants (mostly), but the members of the Utah Legislature’s tax reform task force did stay in a Holiday Inn Express. So why not take a crack at overhauling a multibillion-dollar tax code on the fly?
Legislative leaders seem intent on doing just that. The latest revised version of the bill, spanning roughly 200 pages, dropped late Friday evening and lawmakers will be asked to vote on it in a special session within the next few weeks.
Compare the current process to the last time Utah implemented major tax reform. A task force created in 2005 produced a bill that failed in the 2006 session. Lawmakers regrouped and, during a special session that year, passed a dual-track system as an interim step toward reform.
In 2007, they replaced that with a single rate that cut income taxes for most Utahns beginning in 2008 and reduced the sales tax on food.
John Dougall, who is now the state auditor, was in the House at the time and sponsored the tax reform legislation. He had legislative economists run literally thousands of models to reflect the different scenarios, producing detailed scatterplots showing how the revisions would impact every single tax filer in the state.
“It was a difficult, complex process,” Dougall told me last week. “There were lots of iterations, lots of concerns, lots of challenges trying to find that level of support. It took a couple years. It was not something that was easy.”
Because of that hard work, the final version of the bill had unanimous support from legislators in both the House and Senate, and then-Gov. Jon Huntsman. But it took years to accomplish.
And the bill they ultimately passed was nowhere near as complex as what lawmakers are now trying to pull off in mere months. This reform effort doesn’t just make simple tweaks to income taxes and the sales tax on food.
It imposes a sales tax on a series of new services like Netflix and Lyft (but leaves out a lot more), raises the sales tax on food but offsets it with refundable credits for low-income Utahns, repeals a number of sales tax exemptions, implements a new sales tax on gas, significantly increases child deductions and changes funding for school lunch.
But that’s only part of it. They also want to amend the Utah Constitution to remove a guarantee that income tax money is spent on education and replace it with a complicated change to local property taxes that has been shrouded in more secrecy than the identities of the Real Housewives of Salt Lake City.
A vague three-page plan has been offered to school districts, trying to win their approval. Essentially, the idea is to put it on local school districts to fund education out of property taxes and to make it easier for them to raise property taxes at the same rate as inflation.
But wait — as they say on TV informercials — there’s more! There is a convoluted equalization arrangement to make sure that districts with low property values, such as Piute, Tintic and Cache, will get state help to make sure they’re at the median level of funding, while districts such as Park City and Salt Lake will contribute to the other schools.
What it means is that your property tax bill will increase every year and there’s a good chance a portion of it will go to help other schools.
On the surface it looks like legislators have worked it out so they can tell voters next year that they have cut taxes while assuring an annual property tax increase that school districts, not lawmakers, will get blamed for.
And right now lawmakers can’t look their constituents in the eye and tell them how they will be impacted by this convoluted mess, because the whole thing is still half-baked.
For the first time last week, my colleague Bethany Rodgers finally received copies of the scatterplots similar to those that Dougall obsessed over. They showed a third of households would see a tax increase, while two-thirds would see a cut.
But a House spokesman said changes had been made that aren’t reflected. The analysis also didn’t reflect the still-developing property tax component.
Even members of the task force have been kept in the dark about the project. During the task force’s last meeting, Sen. Curt Bramble, R-Provo, who worked on the 2007 tax reform package, ran through a slew of questions and warned he had a lot more.
“It would have been nice to have them all along,” said Rep. Francis Gibson, R-Mapleton, co-chairman of the task force.
“It would’ve been nice to have seen a bill,” Bramble shot back.
It’s true that we need tax reform.
The amount of money dedicated to public education versus all of the other state services is out of balance.
Last Thursday, Salt Lake County Councilwoman and Republican gubernatorial candidate Aimee Winder Newton tweeted an appeal to legislators to not pass the tax bill during a special session and instead to wait until the general session in January.
“It seems a special session during the holidays, when people aren’t paying attention, is a bad idea,” she said. “Something as important as this deserves robust public comment and debate.”
The Legislature should slow down and give the public time and the tools to understand what is being proposed — including an online calculator where people can see how they specifically will be affected.
That way, legislators can hear from their constituents about concerns before being asked to vote on a massive bill, then figure out later what it means.
It is important to get tax reform done. But it’s more important to get it done right.