The Capitol in Salt Lake City is pictured on Friday, Jan. 25, 2019. | Silas Walker, Deseret News
SALT LAKE CITY — A Senate committee endorsed a resolution Thursday that would ask voters to amend the Utah Constitution to also use income tax revenue for services for children and people with disabilities — part of a last-minute effort by lawmakers to address tax reform before the session ends next week.
House Republicans are considering an $80 million tax cut in the state’s income tax rate, from 4.95% to 4.9% or lower. But GOP senators, who also hold a supermajority, continue to be reluctant to look at tax cuts this session because of the uncertain economic effects the new coronavirus may have on the country and the state.
“That right now may not be fiscally responsible,” Senate President Stuart Adams, R-Layton, said.
No decision was reached on a tax cut in a closed-door caucus midday, House Speaker Brad Wilson, R-Kaysville, told the Deseret News. He said the income rate reduction mentioned Wednesday by House Majority Leader Francis Gibson, R-Mapleton, is one option.
“We’ll just keep talking through it until we get some consensus and direction,” the speaker said.
Legislative leaders had said they’d hold off on tax reform until next year after starting the 45-day session with a repeal of a December tax package because of citizen backlash.
But a new plan has surfaced to ease the budget imbalance resulting from income tax revenues continuing to grow much faster than sales tax collections that’s focused on expanding the use of income tax collections beyond education.
Gov. Gary Herbert cautioned that Utahns won’t approve the proposed constitutional change “unless everybody, meaning the Legislature and the stakeholders in education, come together and say, ‘Let’s hold hands and sing ‘Kumbaya’ and say we all agree, this is a better way to go forward.”
Wilson disagreed.
“I think that this money isn’t the education community’s money exclusively. It’s the taxpayers’ money and taxpayers have influence over how to choose to spend that money,” the speaker said. “We’re just saying we want to have the option for voters to choose whether or not to do this.”
The Senate Revenue and Taxation Committee voted 6-2 to support SJR9, which was opposed by the Utah Education Association but supported by the Utah Taxpayer Association. Salt Lake Democrat Sens. Luz Robles and Gene Davis voted against the bill.
Brad Bartels, executive director of the Utah Education Association, said the resolution, which would ask voters to amend the Utah Constitution extending the income tax earmark to children’s services and services for people with disabilities, would be “a generational change in education funding.”
He urged committee members to study the proposal in a special session instead of addressing it in the waning days of this session.
Sen. Curt Bramble, R-Provo, shot back that the UEA didn’t want tax reform handled in a special session last year.
“When in the world do you think we ought to address this problem?” Bramble asked. “Not once has UEA come forward with constructive, practical solution to the problem.”
Bartels said the chief concern is that the resolution does not define “support children and to support individuals with a disability.”
Sen. Dan McCay, R-Riverton, the sponsor of SJR9, said the proposed constitutional amendment is part of lawmakers’ “constant effort to address budgetary constraints.”
McCay said the Legislature heard loud and clear during tax reform efforts that the public wants more say in changing tax policy.
Lawmakers could have defined support for children and support for people with disabilities as “education” in state statute, thereby making the programs eligible for income tax funding, he said.
Instead, legislative leaders decided to take a constitutional amendment to the people.
This effort is about giving the public a say, McCay said.
Constitutional amendments require a two-thirds vote of the House and Senate to place the issue on the ballot in November. A majority of voters would need to approve the amendment for it to take effect.
Davis said he believes the legislation is on track for passage so it will ultimately be up to Utah voters.
“I believe the public will vote it down,” Davis said.
Following the committee meeting, Bartels said UEA members are unclear on the practical effect of funding services for children and people with disabilities.
“That could be tens of millions of dollars in funding. That could be hundreds of millions of dollars in funding. It’s not really clear from the provision what that means so it’s very hard for us to support that resolution without more time to explore what those things are,” Bartels said.
Bartels said UEA officials are still talking with legislative leaders. He described the conversations as “productive.”
As the Senate Revenue and Taxation Committee met Thursday, the Utah State Board of Education debated SCR9, ultimately deciding to support the resolution by a vote of 11-4.
The board also voted to support HB357, which would expand local school boards’ ability to levy property taxes “for other needs in support of the school district.” Currently, the levy is limited to capital projects or technology programs or projects.
State School Board President Mark Huntsman said the board spent nearly two hours discussing the legislation, which is part of a proposal that would also ensure public school enrollment growth and inflation are automatically funded.
Legislative leaders say the proposal is intended to protect, grow and stabilize education funding while giving lawmakers greater flexibility to address the cost of social services that supplement educational needs.
Some board members wanted more assurances about raising education funding by increasing the value of the weighted pupil unit, and also expressed concerns about dedicating funding to services for children and those with disabilities that were not clearly defined.
Huntsman said by the time the legislative houses vote on SJR9 he believes that there will be more clarity over how income tax revenue would be used.
In general, the plan has “guard rails” that would protect education funding and ensure automatic adjustments for enrollment growth and inflation, he said.
As for using income tax revenue for purposes other than public schools, Huntsman added, “we are in the children business, directly and indirectly.”
The state’s local school boards and superintendents have not yet taken a position on either bill.
HB357 would only go into effect if a majority of Utah voters agree to amend the Utah Constitution to add new earmarks besides education. The bill, sponsored by Rep. Robert Spendlove, R-Sandy, will be heard in committee at 5 p.m. Thursday.
HB357 calls for moving Minimum School Program funding to a constitutionally protected account for K-12 education, automatically adjust education funding for enrollment growth and inflation, and reserving revenues to meet education commitments during economic downturns.
Brittney Cummins, vice chairwoman of the State School Board , said Utah must address its revenue imbalance.
“This proposal keeps revenues at current levels, provides for a strong education base budget and enables growth in education funding even during economic downturns,” she said in a statement.
Meanwhile, Sen. Kathleen Reibe, D-Cottonwood Heights, has introduced a proposed constitutional amendment intended to set a bar for per pupil funding that “may not be less in any year than 20% of the national average for per pupil funding for that year.”
SJR14, as drafted, would go into effect on Jan. 1, 2021. It would also require two-thirds vote of each legislative house to get on the ballot and majority approval by voters.
This story will be updated.
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