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2 hopefuls go head-to-head over taxes

Both at debate warn that tough revenue times are looming

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It's the political kiss of death among Utah Republicans to ever talk about increasing taxes.

Can anyone forget the pain and suffering former GOP Gov. Norm Bangerter went through when he pushed a tax hike for public and higher education in 1987?

So don't suppose that GOP gubernatorial candidates Nolan Karras and Jon Huntsman Jr., who face each other in a June 22 primary, are going to poke the tax-hike snake with a 10-foot pole. They aren't.

But both men, in a debate Thursday, warned that really tough tax revenue times are just over the state's horizon.

Would you ever consider raising taxes? They were asked that by a moderator for the Salt Lake Area Chamber of Commerce and KCPW radio debate.

"Very reluctantly," said Karras, a former speaker of the Utah House and now chairman of the Board of Regents, which oversees the state's colleges and universities.

"I will not raise taxes," said Huntsman, a former U.S. and trade ambassador.

But, said Karras, who is a certified public accountant who runs a $500 million investment firm, some fine experts say Utah could very well be running what's called a "structural deficit." In other words, we've been building a state government that can't be supported by the tax structure and tax rates we have.

Huntsman told the crowd in the Salt Lake City Library auditorium that the next governor should be cutting taxes — like reducing part of the sales tax on food — rather than thinking about rasing taxes.

"We are the seventh-highest taxed state" in the nation, said Huntsman. "There can never be an excuse to raise taxes. We must live within our means. We must start treating citizens like (private business) customers."

Sounds good, says Karras.

But there are 145,000 new school kids headed for public education. From his work as regent, he's seen Utah college students pick up more and more of the tuition burden, and thousands of college students today are not funded — colleges just have to find ways to accommodate them without any more money for the growth in student numbers.

"We're going to have to make government smaller," said Karras. "We just have too many programs." As governor, he would lead "a very vigorous debate" on the looming financial situation — hinting that recent governors and legislatures just haven't met the problem head-on.

Higher technology must be utilized, "waste" wrung from current programs, said Karras. But all that may not be enough, Karras admitted. "The state's tax structure" must be examined, not necessarily for tax increases but for fairness and efficiency.

While Karras said he won't raise taxes, at the same time it's not realistic for Huntsman to keep talking about cutting the sales tax on food. Karras added he's glad that it appears Huntsman is backing away from the reducing the food tax.

Not so, said Huntsman. "Read my 40-page, 10-point economic development plan," Huntsman urged listeners several times. The state's portion of the sales tax on "our most staple foods" — like those now covered by the federal food stamp program — can be phased out. But you have to do it carefully.

Come on, said Karras. "It's like $250 million" to remove the tax in total — and the state can't afford it.

But he wouldn't remove all of the tax, said Huntsman. Local government would be held harmless from the portion of the tax it collects from grocery stores, said Huntsman.

And there are new state revenue sources that can, as they come on line, fill in the funding gap. "I would hold public education harmless" in whatever tax revenue restructuring scheme he comes up with, promised Huntsman.

Both men said they really don't know where the money will come from for new roads and the rebuilding of existing roads.

While not a sexy subject, "the road question is the most difficult" the next governor will face, said Karras, who at one time headed the state's building board.

Again, neither man advocates raising the state's 24.5-cent-per-gallon gasoline tax, not increased since 1997.

Huntsman said projects in the state's Centennial Highway Fund must be reprioritized. Karras agrees but adds that "billions of dollars" in promised road construction has been made though the money isn't here to keep those promises.

With dozens of sales tax exemptions on the books, maybe it's just time to sunset all of them and rebuild the sales tax structure with a new paradigm, Karras said.

E-mail: bbjr@desnews.com