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Tax increases on the table for upcoming legislative session

SALT LAKE CITY — Tax increases are on the table for the 2015 Legislature, participants in the Utah Taxpayers Association's annual pre-legislative conference were told Monday.

When the session starts Jan. 26, the Republican-controlled House and Senate will consider raising or restructuring the state gas tax to fund transportation, as well as increasing the income tax to provide more money for schools.

At the business group's conference, new House Transportation Committee Chairman Rep. Johnny Anderson, R-Taylorsville, outlined his proposal for shifting the state's 24.5-cent a gallon gas tax in place since 1997 to what amounts to a sales tax.

And Rep. Jack Draxler, R-North Logan, made the case for his plan to increase the state's income tax rate by 1 percent, even as a new poll shows a majority of Utahns don't support the hike.

Both House Speaker-elect Greg Hughes, R-Draper, and Senate President Wayne Niederhauser, R-Sandy, talked about the need to come up with more cash for maintaining the state's transportation infrastructure.

But the two legislative leaders disagreed on the best way to get more money from gas sales. And neither Hughes nor Niederhauser expressed interest in raising income taxes next session.

"People are still looking to get their legs underneath them. We still don't feel like this economy is fully recovered, so we have to be careful," Hughes told reporters. "We can do this without onerous tax increases, and that's what we're after."

Niederhauser said raising more money for roads would make more cash available for schools.

"We have to stop the bleeding from the education fund to the transportation fund at a very minimum,” he said. “But I’m not in favor of us giving less incentive to productivity and business and commerce to get money into the education fund. There are other ways to do it without taxing productivity."

The head of the taxpayers association, Sen. Howard Stephenson, R-Draper, said many in the audience, which included lobbyists and business executives, were there to hear about the two potential tax increases.

"They were trying to find out how seriously the Legislature would consider them," Stephenson said.

He said they're now "nervous" about the gas tax, but "with the income tax, they walked away feeling that does not have a good chance of passing."

In what has been labeled a bold move for education, Draxler is proposing to increase the personal income tax from 5 percent to 6 percent, which would bring an estimated $585 million for education. HB54 would designate 75 percent of collected funds to performance-based salary raises for teachers, and the other 25 percent would fund technology training and implementation programs.

Unlike previous polls showing public support for tax increases benefiting education, a poll released Monday showed 54 percent of voters opposed Draxler’s Public Education Increased Funding Program, with 43 percent favoring it. The poll by Dan Jones & Associates has a margin of error of plus or minus 4 percent.

While Gov. Gary Herbert’s budget proposal for 2016 includes $500 million in new money for education, Draxler told the audience the proposal is “smoke and mirrors” because it draws on funds already earmarked for transportation.

Draxler said for Utah to maintain its top ranking as a place to do business, better long-term investments have to be ensured for education in the state through the income tax.

“We have kind of danced around this for a long time,” Draxler said. “I’m proposing that we bite the bullet, step up, put our money where our mouth is, put up or shut up, whatever catchphrase you want to employ, and seriously take a look at where we want to be.”

The gas tax was described by Anderson as "antiquated" and in need of transformation. He said he is working on a bill that would calculate the tax annually by applying a set rate to the average price of gas over the previous year.

Anderson said for at least the first year, the tax would be revenue-neutral, meaning Utahns would not pay more at the pump. But as gas prices rise from their current record lows, that tax, which would start at less than 10 percent, would go up, too.

He said he also wants to give local governments the option of adding their own fuel tax, likely less than 5 cents per gallon. That proposal, Anderson said, will be a harder sell to lawmakers.

Hughes said treating the state gas tax like a sales tax makes sense long term, especially as cars continue to become more fuel-efficient.

"Right now, I think the gas tax as we collect it today is a dinosaur. I don't think it's doing the job. I think it hasn't done the job for a long time," he said, calling the willingness to tackle the issue and low gas prices a "perfect storm" for a change.

Niederhauser, however, said he would like to see a five- or 10-cent increase in the existing gas tax. The Senate leader said lawmakers may end up with some combination of the existing tax and a new sales tax on gas.

"We've been pushing it off. I hope it's not pushed off until another session," Niederhauser said. "I don't think the good solution is more congestion or not being able to maintain our roads."

The morning conference began with a moment of silence for former House Speaker Becky Lockhart, who was described as "extremely critical" with an unspecified aggressive disease by Sen. Curt Bramble, R-Provo, a family friend.

Bramble said the family has asked for privacy and prayers. He said more information about the condition of Lockhart, 46, the state's first woman House speaker, will be made available by the family when they feel it's an appropriate time.

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