Utah's Republican state senators emerged from a four-hour, closed-door caucus Saturday with a budget priority list that includes $150 million in tax cuts — and, surprisingly, an agreement to at least consider taking more of the sales tax off food.
The decisions made in the rare weekend meeting mean leaders of the Senate and House — both of which have ironclad GOP majorities — can begin budget negotiations in earnest as the 45-day legislative session enters its second week.
And there's plenty of negotiating to be done over spending a record $1.6 billion in one-time surpluses and growth in revenues. House Republicans decided they wanted to cut taxes $300 million. Gov. Jon Huntsman Jr. has called for a $100 million reduction.
Everyone wants to avoid what happened last year, when a compromise tax-cut package crafted after weeks of often hostile discussions unraveled on the floor of the House in the final hours of the session.
"We're a lot closer at the end of the first week than we were last session," Senate President John Valentine, R-Orem, said Saturday after outlining the results of the caucus he described as called "to focus on the future of Utah."
Both House Speaker Greg Curtis, R-Sandy, and the governor's office were encouraged by the outcome of the Senate caucus. Curtis said there's room for compromise. "There always is," he said, calling lawmakers "leap years ahead of where we were last year."
The governor's spokesman, Mike Mower, said everyone is now "focused on ensuring that we have significant funding for addressing unmet needs in education and transportation ... and that it's likely there will be some form of tax relief for Utah taxpayers."
The GOP senators made it clear they're willing to compromise with their House counterparts by leaving on the table what would be a further reduction in the sales tax on food — despite their distaste for a House effort to wipe out the hated tax entirely.
Curtis has made taking the sales tax off food a priority and was able to get lawmakers to agree last year to cut the state's share in half. Now, the House speaker wants to go further by eliminating the so-called "boutique" taxes from food purchases.
The proposal, which would create a single statewide rate for food purchases, was endorsed by the governor in his State of the State speech last week. It would get rid of about $20 million in locally collected taxes, including those assessed for transit and for zoos, arts and parks.
Curtis said he appreciated the Senate caucus position on the food-tax issue. "I'm grateful," he said, noting Rep. Merlynn Newbold, R-South Jordan, already had a bill ready that would take away the local taxes, HB282.
What the Senate isn't going to consider is reducing or eliminating a state property tax levy, a plan pushed by Curtis. Valentine said Senate Republicans want to continue the income tax reform started last year with the establishment of a flat tax option sought by Huntsman.
The Senate is expected to support an income tax cut similar to the governor's plan to reduce the rate of the new flat tax to 5 percent and establish a tax credit that would encourage lower-income Utahns to switch from the current tax system.
Curtis said he still likes a property tax cut better than more income tax relief. "It's early on. We'll have a lot of discussion," he said, promising that the $250 million property tax proposal is not dead yet.
Valentine and other members of Senate leadership were more interested Saturday in talking about their plans to increase spending for education and other state needs than their differences with the House.
At the top of their priority list is spending even more on public schools than the $320 million proposed by Huntsman in his $10.7 billion budget. Next week, Valentine said the Senate will approve a base budget that includes $72 million in growth for public education.
The 21 Republican senators, however, were less specific about how much more they'd like to give other areas of state government on their list, transportation, higher education, employee compensation and debt relief.
They pledged not to issue any bonds this session — not even for the massive road projects already underway — and to pay off as much of the state's existing bond debt as possible. All that will depend, however, on how much additional cash is actually available.
While the debate over tax cuts and spending increases is well underway, nothing can be finalized until state revenue estimates for the budget year that begins July 1 are available, sometime in February.
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