The Utah Senate gave unanimous, preliminary approval to a $150 million tax cut on Tuesday, through a bill that lowers the state’s sales tax rate from 4.7 percent to 4.45 percent.
Sen. Wayne Harper, R-Taylorsville, said his bill, SB99, is meant to keep the past promises made by lawmakers that taxes would be cut once Utah was able to collect sales tax from online and remote sales.
The U.S. Supreme Court ruled in 2018 that states could require the collection of online sales taxes. Prior to that ruling, Utah law urged residents to voluntarily pay online sales taxes, but few Utahns did so.
“I believe it is important that we keep our commitment," Harper said.
In his budget recommendations, and later during his State of the State address, Utah Gov. Gary Herbert called for more than $200 million in tax cuts as part of a reform effort that would apply the state’s sales tax to a broader range of financial transactions.
Legislative leaders have agreed with Herbert on the need to reform, or “modernize” Utah’s sales tax, but they have shied away from providing details of their plans and priorities on the subject.
Harper said his bill is separate from that effort, in that it does not address what transactions are captured by the sales tax or any existing exemptions.
“I’m not dealing with any exemptions. I’m not dealing with the potential tax reform,” he said. “It’s just the [tax] rate, solely, that this bill addresses.”
State revenue estimates show more than $1 billion in surplus revenue for lawmakers to appropriate during the current legislative session. But the bulk of those new dollars are generated by the state’s income tax for use in the Education Fund.
On Tuesday, the Senate’s budget chairman, Layton Republican Sen. Jerry Stevenson, said income tax collections in December and January have been lower than the state’s models anticipated.
“Everyone thinks this is a great budget year and there’s money flowing out the doors of the Capitol,” Stevenson said. “We’re really looking at less than $1 billion.”
Stevenson said lawmakers have made a combined 275 requests for new state funding, including roughly $263 million in ongoing appropriations and nearly $668 million in one-time spending. And those requests, he said, do not include funding increases for public education to account for enrollment growth, salary adjustments for teachers and other expected investments.
“It will be a busy session,” Stevenson said. “We’ve got our work cut out for us the next few weeks.”
Senate President Stuart Adams, R-Layton, said not every request can or will be funded, as lawmakers are careful not to spend money the state doesn’t have.
“We still have a bright future,” he said, “we just want to be cautious.”
SB99 received a 26-0 vote in the Senate on Monday. It requires an additional vote in the Senate before moving to the House.