Tax cuts among proposals for Utah budget surplus

SALT LAKE CITY (AP) — A projected budget surplus has prompted some Utah lawmakers to push for reduced government spending by increasing state reserves or issuing long-term tax cuts. “We don’t know where things are going,” said Rep. Jim Nielson, R-Bountiful, the sponsor of a bill that would require the state to put some of the tax revenues from oil and gas mining into a reserve account. “We owe it to our future, and to future generations, to prepare.” Through House Bill 210, which could be voted on as early as Tuesday, Nielson would eventually set aside $96 million each year from severance tax revenues. Currently, that money goes into the general fund. Nielson said he is willing to negotiate on the amount placed into reserves, especially if the money was instead used to boost the state’s Rainy Day Fund or lower bonding debt. While Nielson is focused on savings, other lawmakers are eyeing lowered taxes. The largest proposed tax cut could exceed $600 million, primarily because the state income tax rate would drop from 5 percent to 4 percent. The state sales tax rate would also be reduced, from 4.7 percent to 3.5 percent. “We need to ask government to do less for less,” said Rep. John Dougall, R-American Fork, the sponsor of House Bill 299. “Taxpayers earned the money and know how to spend it better. People are more efficient with their finances.” Dougall’s tax cut would be more than double the projected $280 million surplus for the next fiscal year. The bill could receive a committee hearing later this week. Although lawmakers have almost unanimously vowed that taxes wouldn’t increase this year, legislative leaders and Gov. Gary Herbert have generally been more supportive of shoring-up budgets battered by three years of cuts. That includes funding increases for public education and Medicaid, as well as small raises for public employees. But Dougall isn’t alone in wanting a tax cut. Herbert, for one, proposed a reduction in the rate employers pay for unemployment insurance as a way to spur businesses to hire more workers. Sen. Casey Anderson, R-Cedar City, is working on an overhaul of the tax code that would cut the state income tax rate to below 4 percent. That cut would be balanced by an increase in the sales tax on food and the elimination of a tax deduction for children. The deduction for children could be especially problematic, and Anderson said he is still working out details before the bill is released publicly. But he said something should be done to provide a more stable tax base – income taxes are more volatile, especially when the economy is bad – to prepare for future problems, such as the next recession or a drastically reduced federal budget.

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