By Shaun Delliskave | [email protected]

After the Utah State Legislature scuttled tax reform bill HB441 in February due to public outcry, Murray legislators are again waving a red flag over the current tax reform discussion. Gov. Gary Herbert is pushing legislators into a special session, with a legislative task force compiling recommendations on changing Utah’s tax code.

Rep. Mark Wheatley, representing northern Murray, agreed that tax reform needs to be looked at. “Even though the amount we generate each year is increasing, Utah tax structure has become imbalanced. The General Fund balance percentage is declining. What this means is Utah was once a goods-based industry, now the economy has shifted to be more service based; services such as barbers, hair salons, lawn care, legal services, ride sharing services. While money generated from income tax and local/transportation remains stable, sales tax is making up less and less of Utah’s budget.”

Current proposals include two significant changes to tax policy: (1) imposing a tax on services. In HB 441 in the 2018 General Session, the move would have affected almost every service in the state except for medical. That bill was dropped after much pushback. The tax force is presumably starting over. (2) Changing the earmark on income tax, both personal and corporate, that currently has all income tax go to fund public and higher education. To change this would require changing the state constitution, something the public would have to vote on.

According to Rep. Carol Spackman Moss, “These two proposals, if enacted, would greatly affect Murray, in particular taxing services would negatively affect small businesses, from travel and financial services to lawn care, car washes, piano teachers, architects, attorneys, hair stylists, and many more. Allowing income taxes to be used for other purposes besides education would negatively affect our already underfunded education system, currently the lowest in the nation. This, too, would negatively affect Murray’s economy, as the city relies on a well-educated citizenry to be able to hire qualified workers and contribute to the overall quality of life in our community.”

The tax reform task force is planning on completing an eight-stop tour throughout Utah this summer, having met in Salt Lake County on June 27. There is a concern that tax reform is being rushed through a special session without enough input from constituents. 

“Our legislative fiscal analyst’s office and other tax experts, indicate that changes may need to be made in what and how much we tax may need to change to better reflect the growing service-based economy, but an immediate fix is not necessary,” Moss said. “It should be carefully studied over the next two to three years and incremental changes made, not a major tax shift rushed through in less than a year.”

An interim committee report in May laid out the scope of tax reform; it mainly laid our four options: do nothing, expand the tax base, add a new type of tax, or eliminate silos (i.e., restricted tax revenues to fund particular programs such as education).

Wheatley calls for more significant public input and takes issue with what he sees as his Republican colleague’s predetermined approach. 

“Regarding tax reform discussions, there are many options the state could seriously consider. House Democrats held six town halls on the issue across the Wasatch Front in May to present the tax structure problem to the public and the many options we as a state could take to address it. Our goal was and is to present all of these ideas and get the public’s feedback on all of them. We are not attempting to ‘sell’ a predetermined piece of legislation, much the way the Republican majority did during the session with HB441. We realize expanding sales taxes and removing certain tax exemptions could have many unintended consequences and deserves a robust public discussion. We also are, of course, concerned about protecting funding for education. The tax reform options being considered would have statewide impacts, not just the residents of Murray.”