Will Utahns get a tax cut this year? Utah Legislature still deciding

While there’s lots of late-session talk about various tax increases to pay for a pair of major league stadiums in Salt Lake City, the Utah Legislature’s Republican majority is also still focused on cutting income tax rates.

“I call it a tax cut again, again, again and again now,” Senate President Stuart Adams, R-Layton, said during the Senate’s daily media availability Thursday about what would be a fourth year of tax cuts. “Some of us think it’s a really good idea.”

House and Senate Democrats have opposed a tax cut, saying the money should be used for more pressing state needs such as child care. The House GOP caucus hasn’t yet taken a position, according to House Budget Chairman Val Peterson, R-Orem.

What’s on the table is a reduction in the state’s individual and corporate income tax from 4.65% to 4.55%, at a cost that’s increased from $160 million to nearly $170 million due to revenue estimates going up last week.

A bill doing just that passed the Senate at the end of January, but wasn’t assigned to a House committee for a hearing until Thursday. SB69 is set to be heard by the House Revenue and Taxation Committee Friday morning.

Adams said the hope was that Utah’s income tax rate could be lowered to 4.5%. It’s been almost two decades since the state moved to a single or flat income tax rate of 5% under then-Gov. Jon Huntsman Jr.

“It’s interesting. We’ve heard a bunch of times they’re small tax cuts and then we’ve heard they’re big tax cuts. When we started four years ago, we wanted to get to 4.5.%,” Adams said, calling the four years of reductions “the largest tax cut in the history of this state.”

The tax cuts add up to more than $1 billion, including lowering the state income tax rate from 4.95% to 4.85% in 2022, nearly a $164 million reduction, and from 4.85% to the current 4.65% last year, a $380 million reduction.

Senate Republicans agreed to the lower the rate to 4.55% earlier in the session, Senate Majority Leader Evan Vickers, R-Cedar City, told the Deseret News,

“We took a position that our No. 1 priority was an income tax cut,” Vickers said, adding that although it was discussed as a $160 million reduction, the caucus supported decreasing the rate by 10 basis points, which is one hundredth of 1 percentage point.

Asked if there was pressure to increase the rate reduction now that the updated revenue projections show the state can anticipate an additional $340 million in revenues, he said that’s already been ruled out.

“We had those discussions earlier and decided there was no money to go higher,” the majority leader said.

Even with the extra revenues expected, it’s going to be a lean budget year, Senate Budget Chairman Jerry Stevenson, R-Layton, said. Before the session ends March 1, lawmakers will make the final additions to the $28 billion base budget approved in January.

Currently, for every $1 still available for the Legislature to spend, there is $125 in funding requests, Stevenson said. Without the tax cut, he said the ratio would shift to $23 for every $125 being sought.

That means a lot of the legislation that came with a price tag this session “is not going to go anywhere. There just isn’t any money,” he said, warning there’s “a tough couple of days left” when it comes to the budget.

Peterson, the House budget chairman, said Thursday he believes House Republicans will back the same rate decrease as their Senate counterparts. Republicans hold supermajorities in both the House and Senate.

“I think most of our caucus is supportive,” Peterson told the Deseret News. “We need to have that discussion first. We don’t want to get out ahead of our membership and make sure that we’re all in agreement of the process.”

House Speaker Mike Schultz, R-Hooper, canceled his weekly media availability usually held on Fridays. A spokeswoman for the House majority said Wednesday the speaker “absolutely supports a tax cut, but we are still in discussions on what that looks like.”

Peterson said Schultz “throughout the process has been supportive of trying to reduce taxes so that people can keep their hard-earned money. We think that that’s important. Every little bit helps.”