State tax reform task force schedules visit to Southern Utah

Utah Capitol, Salt Lake City, Utah, date unspecified. | Photo courtesy of AndreyKrav/iStock/Getty Images Plus, St. George News

ST. GEORGE — The Utah State Legislature’s Tax Restructuring and Equalization Task Force is scheduled to hold a town hall meeting in St. George on June 29 at noon.

Members of the task force are hoping citizens and special interest groups will express any concerns they might have during these meetings. The location has yet to be announced.

Washington County Rep. Lowry Snow, R-District 74, said the task force meetings allow open communication and transparency between state officials and Utah residents as both parties work together to propose a “structural solution.”

Snow said he is not looking to make changes that benefit any one area of the state, but Southern Utah has its own challenges and solutions to consider, like using tourists’ sales tax to fund infrastructure and transportation. He said his concern is ensuring that whatever plan that is developed is given “thoughtful process, careful consideration and that it is a plan that is fair to everyone.”

Sen. Karen Mayne, D-West Valley City, said she is concerned with ensuring the financial security of those in need, especially in Southern Utah as many of the residents rely on Social Security.

Thor’s Hammer, one of Bryce Canyon National Park’s most iconic hoodoos, Bryce Canyon National Park, Utah, March 18, 2007 | Photo by Michael Rinker, St. George News

The tax reform task force has announced eight public town hall meetings across Utah in June and July.

The task force had its first meeting on May 30. The legislation that established the tax reform task force states that a final report should be submitted no later than September, and during the meeting, officials said they hope to hold a special session in “late fall or early winter.”

Jonathan Ball, legislative fiscal analyst, shared a presentation with task force members that illustrated national perceptions, explained the challenges, highlighted possible factors and shared legislative responses.

The challenge the task force faces was broken down into three components: the modern economy, the growing population and changing demographics, and the existing, outdated revenue system.

Ball opened the presentation with a personal anecdote of his experiences living in Utah compared to living in Washington, D.C. He touched on the safe schools his children attend, the proximity of trailheads to his home, the number of national parks surrounding Utah, and the kindness of strangers who smile at you on the street.

“But guess what, folks. Our secret, it’s out,” he said. “The growth that has come as a result of our secret being out is presenting us with a bit of a challenge.

The presentation highlighted the 14.4% population growth that hit Utah between 2010 and 2018, making it the fastest growing state. Ball found that even though there is growth in the general fund, it is not enough to keep up with modern needs.

When the Utah sales tax was imposed in 1934, the consumer spending pattern was in favor of goods, at 55%, over services, at 45%. As of 2018, spending on services was at 69%, while goods fell to 31%.

Our society is changing but our tax structure isn’t,” he said.

Ball’s presentation explained how the use of revenue silos are rigid and asserted that this limited flexibility does not benefit the restructuring process.

Revenue silos are created when particular sources of revenue are reserved for certain funds or expenditures. Income tax, for example, is reserved for public education through the education fund.

“That’s wonderful, on the one hand, that we spend so much on education, but on the other hand it can create some challenges in our ability to fund other important things in the states, like infrastructure and transportation,” said Sen. Dan Hemmert, R-Orem, who helped run the legislation behind the task force.

Ball ended his presentation by highlighting four possible solutions: adjusting the existing tax rates, modifying the tax base, reducing the services and investments offered, and dissolving or breaking down the revenue cycles.

Mayne said the task force is going to consider all options.

It doesn’t work to do a little bit here and there,” she said. “It still won’t work as time goes on, so we are going to look at some structural changes.”

Members of the task force also discussed the town hall meetings schedule and drafted a general set of principles they plan to follow as they seek to reform Utah’s tax system.

According to the guiding principles, officials are looking to create a system that is competitive, sustainable, sufficient and fair; members are also looking to keep the new system simple and transparent while ensuring stability and flexibility.

The process is broken down into five sections, starting with the public engagement and listening tour. The second step is to validate the challenge and need for change before the task for will “explore and consider all options,” which is step three according to the document.

The Timpanogos Cave parking lot as viewed from the beginning of the cave access trail, TImpanogos Cave National Monument, Summer 2017 | Photo courtesy of Kelly South, St. George News

After the task force analyzes policy options like modifying the tax base and adjusting the existing tax rates, the fourth step is to narrow down the options to leave only those that adhere to the guiding principles. The last phase of the process is to produce a final report with recommendations to restructure Utah’s tax system.

“Something that we will always be looking at is to make sure those in need won’t be harmed more so than anyone else,” Mayne said.

Washington County Rep. Walt Brooks, R-District 75, said he has drafted and filed legislation that would remove the tax from Social Security. The legislation is known as HB222.

He said the bill was presented last year but he is currently running the bill again to ensure that it is a part of the tax discussion.

“It’s already there, and the people who are on the commission are aware of it,” Brooks said. “So hopefully, when we are looking at all of these things on the table, that reduction of Social Security tax is definitely a part of the discussion.”

The legislation behind the tax reform task force, HB495, was prompted by HB441 after it was pulled amid concerns from businesses and consumers. The bill recommended imposing new taxes on services to settle growing budget concerns and increase spending flexibility.

The task force is set to meet at these locations:

  • Brigham City on June 25 at 6 p.m.
  • Salt Lake County on June 27 at 6 p.m.
  • Richfield on June 28 at 6 p.m.
  • St. George on June 29 at noon
  • Davis and Weber counties on July 8 at 6 p.m.
  • Roosevelt on July 9 at 6 p.m.
  • Moab on July 20 at noon
  • Utah County on July 30 at 6 p.m.

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