Utah Tax Reform Coalition holds town hall meeting as part of listening tour ahead of task force visit

St. George Mayor Jon Pike and Utah Tax Reform Coalition Executive Director Krista Palmer address the audience during a listening tour meeting in St. George, Utah, on June 25, 2019 | Photo by Ryann Richardson, St. George News

ST. GEORGE — The Utah Tax Reform Coalition hosted its seventh town hall meeting Wednesday at the St. George Library.

Krista Palmer, executive director the coalition, said she used to be “super politically active” before taking a five-year hiatus, which ended in March when the proposed Tax Equalization and Reduction Act, designated HB441 in the 2019 Utah Legislature, was rushed through the Utah Senate.

“HB441 got me off the bench in a big hurry,” Palmer said, adding that tax reform has become a unifying issue across the board.

Palmer said part of the reason the topic has become so polarizing is because residents are being led to believe that taxes are complicated. 

“The good news is, it’s not that hard,” she said at Wednesday’s town hall, telling attendees that taxes are simply “revenues in and expenses out” with larger numbers. Palmer said the tax code is approximately one sentence, but the exceptions are what make it “inherently complicated.” Policy decisions are difficult, especially when proposing taxes on all services, such as was proposed by HB441.

Taxes are essentially split into two columns: column A, which states taxes are due unless an exception exists, and column B, which states taxes are not due unless an exception exists. While sales taxes in Utah fall under column A, services fall under column B. 

Palmer explained that some services are already taxed, like telecommunications and dry cleaning, but taxing goods would move services from column B to column A and subsequently force residents to pay tax on things such as funeral costs, music lessons and financial services.

Despite HB441 having been “carried out on a stretcher,” Palmer said the principles contained in the bill have not gone away and that residents should “take that threat” very seriously.  

The death of HB441 prompted HB495, which established the Tax Restructuring and Equalization Task Force. The task force is responsible for listening to residents around Utah during a monthlong eight-stop listening tour around the state before presenting a final report with tax reform options during a special legislative session set for September. 

Read more: State task force prepares for tax reform, looks to protect financial security of residents

The task force will tell residents that principles from HB441 are not being considered, Palmer said, but nothing else has been proposed.

Crystal Young-Otterstrom, Utah Cultural Alliance executive director, said the problem with broad changes – like the ones introduced in HB441 – is that it will affect each community differently. Statewide trends might show an overall positive change, but communities that are more rooted in traditional transactions might see a decrease in revenue generated from sales tax while a neighboring community with more services-based businesses might see an increase.

Read more: Utah Cultural Alliance weighs in on tax reform options leading up to task force listening tour

St. George Mayor Jon Pike said HB441 could have been a disaster for cities like St. George, adding that the best thing for residents to do now is attend the task force town hall, which takes place Saturday at Dixie Tech, to speak with legislators.

“We’ll lobby for the cities, I would suggest you lobby for the citizens,” he said.

Tax reform has become a hot-button issue due to what Palmer calls a “fear-based event”: the decline of the sales tax base. Northern Utah Sen. Lyle Hillyard said the Legislature sees “a very serious problem coming down the road” and that he fears the state will be unable to address increased demands for publicly-funded amenities if tax reform does not pass.

Palmer said she disagrees.

“The sales tax base has not been declining, it’s been growing,” she said. “The theory is, ‘Well now we buy more services than we do goods.’ No, we buy more of both.”

The task force’s listening tour is a great step in the right direction, Palmer said; however, now it is time to slow down, put “everything on the table” and assess whether the state has a revenue problem, a spending problem or a structural problem. 

Overall, Palmer and Pike agreed that they believe the task force will attempt to convince residents that it’s not a spending issue.

“I think they’re going to be looking for some kind of win, and a win for them is not going to be cutting taxes,” Pike said.

Read more: Seegmiller considers solutions as tax reform task force prepares for state tour

Palmer said there are two structural imbalances that might be cause for concern or at the very least will make tax reform a more painful process. 

The first is that the general fund is largely composed of revenues from sales tax, and the second is that there is no additional land – especially in Southern Utah – because “it is locked up by the federal government.”

“We may have an extraordinary opportunity to lead out in the state of Utah, innovating in how we want tax policy to be for the next generation, or it can be all kinds of crazy.”

Palmer said she is not sure if a constitutional amendment to break up the revenue silos is completely off of the table, as in previous Utah Tax Reform Coalition town hall meetings residents have shown an interest in at least looking into the possibility. 

Revenues collected from income taxes are reserved for education, meaning these revenues can not go toward anything else. Some revenues from the general fund are also allocated to education, and years ago, the Utah constitution was amended to include higher education in the silo. 

Palmer said she is not hopeful that legislators will move to amend the state constitution because everyone is afraid to go “head-to-head” with education.

“They all say publicly that Utah ought to have that constitutional silo, but none of them want to take it on,” she said.

The Tax Restructuring and Equalization Task Force will be making its fourth stop in St. George during its town hall listening tour on Saturday at 1 p.m. at the Dixie Technical College auditorium and lobby at 610 S. Tech Ridge Drive. The task force has made itself available to take comment from residents, and residents are invited to offer their concerns or questions in three-minute increments. 

Email: rrichardson@stgnews.com 

Twitter: @STGnews | @AvereeRyann 

Copyright St. George News, SaintGeorgeUtah.com LLC, 2019, all rights reserved.

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