Utah House members decided it was more important to eat than to attend the symphony when they passed a bill Wednesday that would remove the food sales tax from so-called "boutique" sales taxes.
The 47-19 vote in favor of HB282 means local transit districts and 11 other specialty sales taxes, such as those that fund the arts, will be reduced, giving most Utahns "a basic tax cut," if the Senate agrees.
"Some things are more important than other things up here," said the bill's sponsor, Rep. Merlynn Newbold, R-South Jordan. "And people need to eat" more than they need to hear the Utah Symphony, which gets local zoo, arts and parks tax revenues.
The bill would trim $20.5 million in various special sales taxes. But it would restore the revenue to rural hospitals and resort communities by granting $403,000 to affected hospitals and raising the resort sales tax from 1 percent to 1.1 percent.
But transit districts would still lose $17 million, municipal highway districts would lose $1 million, the county ZAP districts would lose $2 million and city ZAP districts would lose $275,000.
The bill's fate in the Senate is unclear. Although the GOP majority is firmly against further reducing the sales tax on food, Republican senators agreed earlier this week to at least consider what they prefer to see as a step toward a "streamlined" sales tax.
Senate President John Valentine, R-Orem, said the chief concern about the bill is the amount of money that local taxing entities will lose. Senators would like to make up all or part of the lost revenue, he has said.
Both House and Senate leadership have requested a detailed breakdown when they meet again next Tuesday to continue their negotiations on a tax-cutting package. The Senate is expected to hold any House tax-cut bills until an agreement is reached.
In the House, Newbold provided statistics that show all retail sales taxes in Utah have been gangbuster revenue sources over the last several years, bringing in double-digit increases not originally foreseen when local voters adopted the special sales taxes.
She said transit projects and services offered by taxing entities that receive the boutique taxes would continue. No one would get less tax money, some would just see slower retail sales-tax growth, she added.
But Utah Transit Authority officials say HB282 would actually have dire consequences for the agency, which is readying to spend hundreds of millions of dollars on commuter rail and expanding light-rail lines.
Most of their $17 million hit would come from funding that pays for operation of TRAX light-rail and bus lines, UTA spokesman Justin Jones said. The rest of the money would come from the recently approved sales-tax hike in Utah and Salt Lake counties to build rail lines.
"What this will do is delay construction of the recently approved rail lines, but more importantly, it will impact our service levels by 10 percent, or $13 million this next year," he said. "What we're talking about is impacting the very people who depend on us the most."
Agency officials said they were not opposed to removing the sales tax on food, but would like to find a way to keep UTA's funding whole, so that riders won't be impacted, Jones said.
Lawmakers need to act now if they want to further cut back on the sales tax on food, Newbold and House Speaker Greg Curtis, R-Sandy, told their fellow GOP caucus members this week.
UTA was given approval by voters in both Salt Lake and Utah counties last November to increase transit sales taxes by 0.25 percent. When that new tax takes effect April 1, UTA officials will begin bonding against the new revenue stream of $64.7 million to build commuter and light-rail projects in those two counties. Once bonds are issued against the 0.25 percent tax, it will be almost impossible to reduce the revenues then, the lawmakers warned.
There are 12 different kinds of specialty, or "boutique," sales taxes, said Newbold. They cover most of the state's population, so HB282 is really a tax cut on the most basic of necessities for most Utahns.
In the 2006 Legislature, lawmakers reduced the state's share of the sales tax on food by 2 percent, to 2.75 percent.
HB282 doesn't touch the 1 percent city sales tax, the 0.25 percent county sales tax and the remaining 2.75 percentage points of the state's sales tax on food. But the bill would make the food sales tax 4 percent statewide, making it easier for grocery stores and other food retailers to comply with the complex sales-tax law.
"There are today 97 different sales-tax rates, or districts, in the state," said Newbold. The goal of HB282 is to reduce the food tax further, but food tax simplicity is another side benefit.
House Majority Whip Gordon Snow, R-Roosevelt, said rural areas of the state could still be harmed by HB282. He asked that before the Senate considers it, if Newbold could look at ways to "make whole" other districts that rely on the boutique sales taxes, such as a city road district.
Newbold promised to consider all options.
But 19 House Republicans and Democrats voted against the bill.
House Minority Leader Ralph Becker, D-Salt Lake, said Salt Lake County voters in November by large majorities voted in the new 0.25 percent transit tax and renewed the current 0.1 percent county-wide ZAP tax. Trimming back the tax base for both those taxes, and thus cutting those revenues, would clearly go against what county residents want, he said.
Contributing: Lisa Riley Roche
E-mail: bbjr@desnews.com; nwarburton@desnews.com