Gov. Norm Bangerter, after meeting with GOP legislative leaders, announced Wednesday morning he is calling a special session to deal with the estimated $75 million state budget surplus sometime in June.
Democratic leaders and some Republicans have criticized Bangerter's special session plan, saying it is a political effort to return the money before this November's election. The governor is trailing Democrat Ted Wilson in public opinion polls.In a press conference, the governor said that the surplus - still not finally determined by the Utah Tax Commission - will average between 10 and 15 percent of each taxpayer's state income tax return.
"That is not insignificant. I have said all along that if we take in more money than what was estimated, we should return it to those who paid it, and that is the taxpayer," Bangerter said.
Other administration officials said the refund should average between $130 and $140 but that some will get a small amount and others will get significantly more, depending on how much state tax was paid.
Bangerter said one of the main reasons he wants a summer special session is to take up the issue of the federal income tax deduction on state returns. That deduction was taken away in 1987, raising taxes for many Utahns.
Until last year, Utahns could deduct from their state taxable income the amount of federal income tax paid. That lowered their state tax bill.
"Federal deductibility is, I believe, a critical issue to economic development in this state, and I want to look at it," Bangerter said.
Democrats in the Legislature don't want to return the federal deductibility, saying that proportionately it helps wealthy Utahns more than those of lower income. But many Republicans want to return part or all of the deduction, saying it discourages business owners and leaders from locating or expanding in Utah.
In a morning Appropriations Committee meeting, lawmakers heard estimates that not having the federal deductibility adds between $103 million and $110 million to state coffers.
Bangerter said that while the surplus may not reach that amount, a percentage or a cap could be placed on that deduction to return whatever amount is desired.
The governor added that he has not yet decided if he wants a cash rebate to taxpayers, which could occur before the election, or a refund or credit on 1988 tax returns, which wouldn't reach taxpayers until next spring.