Utahns will see an income tax cut a year from now, but hazardous-waste companies will be paying a new tax, legislators decided.
The 2001 Legislature didn't set any records in tax cuts. At $25 million lawmakers fell short of some of the big tax cuts of the 1990s — like a $90 million property tax cut a few years ago. Since 1993, Utah legislators have given a combined total of more than $1 billion in tax reductions.
Still, the majority Republicans this session did more than GOP Gov. Mike Leavitt recommended when the Legislature started Jan. 15. Leavitt wanted just a $5 million cut but reluctantly agreed to the $25 million tax package that Republicans in the House and Senate ultimately came up with.
"I feel comfortable about the size of it," he said. "I would have felt better about less."
Leavitt said he would have preferred to spend the difference primarily on education.
The biggest slice of tax-cut pie was $18 million used to spread the current state income tax brackets. The top bracket — a 7 percent tax rate that kicks in at the $7,500 income level— will move to a starting point for a married couple to just over $8,600.
According to Utah Tax Commission officials, the change will mean a $32 tax cut for nearly all Utah Utah couples, less for singles.
But lawmakers failed — once again — to index the income taxes for inflation. That means in three or four years inflation will catch up to the bracket adjustments made this year and an "automatic" tax increase of around $4 million a year will once again begin unless future legislatures make adjustments.
While taxes are going down, lawmakers also hiked taxes on the radioactive waste business and raised or imposed more than 100 kinds of fees.
As a result, the cost to do business in Utah is going up for many professions, some significantly. The state anticipates nearly $2 million in additional revenue from escalating fees in areas ranging from agriculture to health to public safety.
Aestheticians, or skin-care workers, and nail technicians are being required to pay licensing fees for the first time, resulting in more than $100,000 in additional state income. Annual renewals for barbers and cosmetologists went from $25 to $40, which alone will bring in an estimated $306,800.
A tax on low-level radioactive waste was a hotly debated issue as the session came to a close Wednesday night. When all was said and done, the state will get about $744,000 next year, most coming from radioactive-waste giant Envirocare of Utah. The bill also would impose a tax for the first time on International Uranium Corp., a company that "recycles" old uranium mill tailings at its mill in Blanding.
For years, lawmakers have looked at ways to tax radioactive waste. But this is the first year it has reached lawmakers for a full debate.
The final plan imposes a tax ranging from 5 percent to 12 percent on Envirocare depending on the type of waste. Starting in 2002, it also calls for an annual payment of $400,000 — double the amount of the version passed by the House. The state would use that money to manage the facility 100 years after Envirocare closes.
Envirocare officials say the annual payment is "ludicrous" because the so-called Class A waste, mostly contaminated soils, loses its radioactivity in 100 years.
"After 100 years it does not pose a hazard," said Envirocare spokesman Tim Barney.
Senators, however, wanted to drain a whole lot more money from Envirocare.
Sen. Bill Hickman, R-St. George, amended the bill to hike the annual payment to $1 million. But Sen. Ron Allen, D-Stansbury Park, argued it would put Envirocare out of business.
"I'm told it would destroy this company," he said. The bill failed by a vote of 20-8.
But Hickman worked out a compromise that was acceptable to the bill's sponsor, Rep. Jeff Alexander, R-Orem. That compromise, an annual payment of $400,000, barely passed with Senate President Al Mansell casting the deciding vote.
The tax plan does not address Class B and C waste — wastes thousands of times more radioactive than the company now accepts.
Envirocare will come before lawmakers with a proposal to take those wastes in 2002. By agreeing to the tax this year, lawmakers may be more willing to grant Envirocare's license next year.
That is why some lawmakers were opposed to the tax this time around.
"It's interesting, with a surplus this year that we're taxing Envirocare," said Rep. Chad Bennion, R-Murray. "Don't we have to bleed over B and C again?"
Legislators gave a tax break to computer chip makers, though a threatened veto by Leavitt prompted some 11th-hour changes to scale it back from five to three years. It's hoped the tax incentive will get Micron's huge northern Utah County plant operating.
Lawmakers also passed several other bills that either don't affect state revenues or are being paid for out of a pot of money other than the $25 million set aside for ongoing tax cuts. Those include: SB49, a $3 million tax cut on aviation fuel; HB110, which exempts sales tax for those who donate or buy food for emergency food agencies; and SB71, a $1,000 income tax credit to families who adopt special needs children.
While legislators were pleased they gave some general tax relief this year, some conservatives wondered why it wasn't more.
The $25 million GOP tax package is just 3.8 percent of the $650 million legislators saw in one-time surpluses and ongoing revenue growth.
And while Utah was, again, ranked by Governing magazine as one of the best-managed states in the nation, the CATO Institute, a libertarian think tank, gave Leavitt a "D" in its national rating because state government has grown so much in the 1990s — the budget doubling over those years.
Contributing: Dennis Romboy.