Tax cuts and election years usually go hand-in-hand, and if Utah legislative leaders get their way, 2022 will be no different.
New revenue estimates released Tuesday show the state could have an extra $930 million to spend in next year’s budget, along with another $1.2 billion in reserves.
Democrats, led by Rep. Rosemary Lesser, D-Ogden, are pushing to end the 1.75% state sales tax on groceries. She estimates ending that tax permanently would cost about $140 million annually. Gov. Spencer Cox added a $160 million “food tax rebate” in his 2022 budget proposal, which was unveiled on Tuesday morning.
More likely is some income tax reduction. Last year Sen. Lincoln Filmore, R-South Jordan, proposed a two-year cut in Utah’s flat tax rate from 4.95% to 4.75%. If tax collections did not keep up, Utah’s tax rate would return to 4.95%. Fillmore’s proposal, which did not pass, carried a price tag of $274 million per year.
“My personal preference would be to see some income tax reduction. I think all options are on the table,” House Speaker Brad Wilson, R-Kaysville said.
“There’s 104 of us. Everyone’s got their own opinion and ideas. We’ll see what happens,” he added.
Lawmakers also pumped $335 million into next year’s public education budget. A change made in 2019 changed how the Legislature funds education, requiring lawmakers to fund growth in schools and cover any inflationary costs. Legislators added $263 million to the public education base budget to meet that obligation. That money will also increase funding to programs for at-risk children. Lawmakers set aside another $72 million to boost per-pupil funding next year. Utah moved out of last place in per-pupil funding last year, jumping ahead of Idaho.
Leaders made several other recommendations on Tuesday that will shape the final budget that will come together in early March.
$125 million will go toward the cost of living salary increases for state employees — another $30 million for pay increases for law enforcement officers.
$129 million for social service programs. Most of that will fully fund Medicaid growth and cover inflationary costs. Another $19 million will pay for autism insurance, providing home and community assistance for students with disabilities and services to address mental and emotional health needs in schools. There’s also $25 million to build a new veterans’ nursing home in Salt Lake City.
$68 million to complete construction on the north building of the Utah Capitol complex.
The Legislature’s top budget committee recommended taking $550 million to pay off bonds for construction of the Utah State Prison and adding a second track to the FrontRunner commuter train. They also set aside another $94 million to further pay down transit and rail bonds.
Senate President Stuart Adams, R-Layton, applauded the cautious approach to state spending.
“It makes sense for us to pay cash for those bonds. We can save that money and reserve our ability to issue more bonds in the future because we may need it,” Adams said.
The budget recommendations include $5 million to pay for an outside law firm to handle the state’s lawsuit against the Biden administration’s move to restore Bears Ears and Grand Staircase-Escalante National Monuments. Democrats tried to move that money toward funding social programs to benefit children.
“The Attorney General’s office is more than capable of handling that lawsuit themselves, so I don’t know why we need to hire an outside firm,” Sen. Luz Escamilla, D-Salt Lake City, said.
Democrats also attempted to shift a proposed $57 million addition to the state’s rainy day fund to pay for homeless services and affordable housing.
“This is just as laudable goal as prioritizing any tax cuts,” Rep. Jennifer Daily-Provost, D-Salt Lake City said.
“We all know that there are some rocky roads ahead of us with inflation, so it’s prudent to put this money aside in case there’s a downturn,” House Majority Leader Mike Schultz, R-Hooper, said.
Both proposals were shot down by the GOP majority.