The chance that Utahns will get a $19 million tax cut later this year is looking better.
But GOP lawmakers - the majority in both houses - still haven't decided for sure that such a cut will come, nor have they decided which tax will be reduced.House and Senate Republicans debated the tax issue in closed caucuses Tuesday afternoon. Earlier this legislative session, GOP leaders doubted $19 million could be found for the cut that is recommended by Republican Gov. Norm Bangerter. A $19 million cut means tax savings of $25-$30 a year per family.
The governor didn't look fondly on their reticence. Simply put, Bangerter told GOP lawmakers that if they don't go along with his recommended cut, he'll tell voters: "I know we should have a tax cut, but those Republicans in the Legislature wouldn't give you one." That, to put it mildly, wouldn't sell well on the home front just four months after incumbents promised voters they'd be frugal with taxes.
Now lawmakers have come around a bit. There are 37 votes in the House GOP caucus for some kind of tax cut, says House Majority Leader Craig Moody, R-Sandy. It takes 38 votes to pass a measure in the House. House Republicans favor cutting the sales tax.
Senators aren't as close to making the tax-cutting decision. "We don't have 15 votes for anything," said Senate President Arnold Christensen, R-Sandy, after his closed-door meeting. It takes 15 votes to pass a bill in the 29-member Senate.
However, senators decided to fly a trial balloon: Sen. K.S. Cornaby's increase in the deduction allowed on state income tax returns for federal tax paid. Increasing that deduction is greatly opposed by Democrats - who say it is a rich man's deduction.
Cornaby's SB102 is scheduled for debate on the Senate floor later this week. It would cost state coffers about $19 million to $20 million. "We don't know if we have 15 votes to pass it, but bringing the issue up now will force some decisions," said Senate Majority Whip Dix McMullin, R-Sandy.
That deduction was removed in 1987, much to the displeasure of wealthier Utahns, many of whom are supporters of the Republican Party. A third of the deduction was restored last year as part of the majority party's income tax reduction. Cornaby's bill would push the deduction from 33 percent up to 50 percent of federal tax paid.
"While we don't have 15 votes for anything, the most support is for income tax relief," said Christensen. "Next is support for property tax relief."
In the House, more than 30 GOP lawmakers said they preferred cutting the sales tax. Whether they meant on all purchases or just on food depends on who's asked. Rep. Frank Knowlton, R-Layton, who is sponsoring a bill to take one half-cent off the state's approximately 5-cent share of sales tax, said an overall cut is the favored approach.
Moody, however, said after the closed-door caucus that House members liked the idea of taking the sales tax off food or possibly giving families a credit on their income taxes for sales taxes paid throughout the year on food.
The problem is that both proposals cost much more than $19 million. Trimming just one-quarter of a cent from sales tax would reduce state revenues by $35 million. And the price tag for taking the sales tax off food amounts to somewhere between $60 million and more than $100 million.
There's still some support in both caucuses for no tax reduction at all. Instead, the $19 million would be used to build state buildings next year without bonding. But Bangerter opposes that plan, and GOP lawmakers may not want to cross the governor on his tax reduction promise.