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UTAHNS MAY GET BIG TAX CUT IN '89

State revenues are coming in so much higher than anticipated, it appears Utahns will get more than Gov. Norm Bangerter's recommended $19 million tax cut later this year - maybe twice as much.

What does this mean for you?Options include lower sales tax rates or partial removal of the sales tax from food; lower income or property tax rates; a tax break on all senior citizen retirement income; or some combination of the above.

The governor said in a recent interview that he's willing to increase his recommended $19 million tax cut - denied by February's Legislature - if state revenues continue to come in above estimates. That surplus is still unknown, and new estimates will come in over the next several months.

House Speaker Nolan Karras, R-Roy, believes revenues will come in high. He thinks the tax cut could reach $30 million to $40 million.

Which tax - or taxes - may be cut remains unknown. In the general session earlier this year, Bangerter offered several options to lawmakers and finally recom-mended restoring, on state income tax returns, more of the deduction for federal income taxes paid. But legislators refused to cut any tax.

Now the governor has added another option - exempting from state income tax all pensions of senior citizens. That would get Utah out of its current problem: imposing the state income tax on federal and private pensions but exempting state retirees' pensions, a procedure ruled unconstitutional by the U.S. Supreme Court.

Bangerter, a Republican, wants some kind of tax cut because he promised during the 1988 elections to reduce taxes where possible. He arrived at the $19 million figure because that's what was left after he put together his 1989-90 budget recommendation last December.

But the Republican-controlled House and Senate refused to grant that tax decrease during its general session. The two bodies couldn't decide which tax should be cut. Bangerter, irritated at his party colleagues, said he'd call a special session, now slated for September, to take up the matter.

The picture is further colored by a new state spending-limitation law. If state revenues come in considerably above budget, as many expect they will, then the state's Rainy Day fund - where surpluses automatically accumulate - will overflow. The spending limitation law won't allow much of that overflow to be spent. It would just sit in state accounts, drawing interest.

Politically speaking, legislators would find it very difficult to just let the tax money sit there, especially considering that 1990 is an election year for all of the House and half of the Senate.

Some Democratic lawmakers have been saying recently that they want to make all senior citizens' retirement pensions exempt from state income taxes.

"If they want to claim to be the party of tax cutters, well, it won't take much to get my (Republican) caucus to run that road real quick," said Karras.

In short, Republicans will beat the Democrats in that race and cut even more taxes - something that may not sit well with some traditional Democratic support groups who yearly ask for more state spending, not less.

With the surplus growing, and the likelihood that the Rainy Day fund will overflow, there's more pressure than ever to give some kind of tax cut. "It certainly smells that way," said Karras.

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STATE REVENUES UP

State officials forecast they will collect $32 million more in income tax this year than the governor's office originally projected, continuing the economic optimism present during the last legislative session.

A monthly report issued Friday by the State Tax Commission said the state is collecting more than projected on all taxes except oil and gas severance taxes. The state's fiscal year ends June 30.

Lee Shaw, Tax Commission spokesman, cautioned against drawing conclusions from the report.

"This is a monthly snapshot of a moving target," he said. However, the report is the first this year to indicate how much income tax is being collected. Tax collections often are a barometer of the state's economic health.

The report shows sales tax revenue growing at 9.6 percent over the previous year, a sign that businesses are prospering.

Another good sign was that corporate franchise taxes were up 34.6 percent over the same time in 1988. Although collections have slowed considerably in early May, the report said the corporate taxes may be evidence of a rebounding economy.

Although gasoline tax receipts were up 1.1 percent through April compared to last year, the report said a recent rise in gas prices could lead to a significant drop later this year. Consumers are expected to buy less gas.