Utah Gov. Gary Herbert, faced with new estimates reflecting a $682 million surplus, called on lawmakers to double the already proposed tax cut from $80 million to $160 million. And Republican legislative leaders were quick to agree.
“This year’s revenue estimates show that our economy continues to thrive,” Herbert said in a prepared statement. “This success is due to hardworking Utahns. Our continuing efforts to find efficiencies in state government and the success of our economy have helped produce another year of strong revenues."
The governor said the additional tax cut should be targeted to help low- and middle-income families.
House Speaker Brad Wilson and Senate President Stuart Adams said they supported a $160 million tax cut.
Legislators have already set aside $80 million for a tax cut as part of their tax reform package, which is expected to be discussed a final time in a task force meeting Monday prior to a legislative special session that could take place Thursday.
An amended version of the bill was posted Friday afternoon that reflected the $160 million tax decrease, with the reduction coming mainly in individual income taxes.
The new revenue estimates unveiled Friday show some $482 million in new ongoing revenues and about $200 million in surplus that is available only one time and not likely to be built into the base budget going forward. Most of the ongoing revenue growth is in income taxes, which are reserved for public education.
The proposed tax cut and the draft bill lawmakers have on the agenda for Monday’s task force meeting does not address a different piece of the reform plan that is intended to help replenish funding for education. That part of the package — which hasn’t had much public discussion and may not be part of what lawmakers put on a special session agenda — could result in annual automatic property tax increases for local school districts. Some estimates put the annual increase at nearly $100 million after five years.
But focusing on the revenue surplus and the governor’s call for a deeper tax reduction, Wilson, the House speaker, agreed Friday that it’s time Utahns receive a hefty tax cut.
“Utah families deserve a dividend on the extraordinary success our state has enjoyed over the past several years, which will come in the form of a significant tax cut," he said in a prepared statement. “This cut in no way diminishes our commitment to education in the state, which will continue to grow in meaningful ways through the tax reform proposal."
Adams, the Senate president, pointed to the numbers as a demonstration of the structural imbalance in the budget that legislators have been warning about: rapid growth in the income tax that is entirely dedicated to education and much more sluggish gains in the sales taxes that fund the rest of government — from prisons to health care.
“This is another prime example that now is a desirable time to be forward-thinking and improve Utah’s tax structure," Adams said. "These revenue estimates highlight the structural imbalance in the state budget we have been working to resolve. The new revenue provides us the opportunity to add additional funding to education while providing Utahns with a tax cut.”
Across the aisle, though, House Minority Leader Brian King, D-Salt Lake City, called the proposed tax cut “irresponsible.”
Because the surplus is coming from income tax, which is dedicated to education, King would like to see those extra dollars go into the classroom. He pointed, particularly, to Utah continuing to fall last in the nation in per pupil spending and said now is the time to change that.
(The governor, however, questioned the accuracy of that ranking earlier this year.)
“I just think it’s totally irresponsible to be giving away money that is desperately needed for public education in the state of Utah,” King told The Salt Lake Tribune. “The governor and the speaker and president just act like happy days are here and we have so much money. Call me wacky, call me nutty, but I have a hard time thinking I’m the only one who feels that way.”
King worries that the state’s leaders are placating individual residents with the tax cut while ignoring the issues — like public education — that matter and need funding. Utah falls behind Idaho in student spending.
The difference between the bottom two states is still so wide that to move up even one spot, Utah would have to spend roughly $200 million — an extra $307 for each of the 650,000 public K-12 students here.
“Now is when we need to catch up," King said. "Now is when we need to try to at least minimize the distance between ourselves and the rest of the country in how we deal with our kids in public and higher education.”
Rep. Carol Spackman Moss, D-Holladay, a former teacher, said she’d also like to see more investment in education with the surplus.
“Everyone likes a tax decrease — there’s no question," she said. “But there’s a trade-off. When we’re in good times and revenues are up like they are, I think we should invest some of that money into underfunded schools. There are so many needs.”
Moss said she often hears in hard times and recessions that there’s not enough money for education and the state will invest when it has more revenue. But then when there is extra money, she said, it often goes to a tax cut instead.
She wants at least some of the surplus to go to special education, reducing class sizes or paying teachers more.