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Tax reform won’t be included in Utah Legislature’s special session

Gov. Gary Herbert, center, speaks about tax reform during a press conference at the Capitol in Salt Lake City on Thursday, March 7, 2019.
FILE - Gov. Gary Herbert, center, speaks about tax reform during a press conference at the Capitol in Salt Lake City on Thursday, March 7, 2019.
Stuart Johnson, Deseret News

SALT LAKE CITY — When Gov. Gary Herbert and legislative leaders announced they were pulling the plug on tax reform last session, their plan was for a task force to come up with a proposal that could be passed in a special session of the Legislature this fall.

The governor has called lawmakers into special session on Sept. 16, but tax reform isn’t on the agenda.

The Tax Restructuring and Equalization Task Force is only halfway through four so-called study meetings scheduled through early October and has yet to make any decisions about fixing the growing imbalance between the state’s two key revenue sources, income taxes and sales taxes.

Income taxes, which under the Utah Constitution must be used only for public and higher education, are growing faster than sales taxes that make up the bulk of the general fund. Backers of tax reform say the state is expected to reach a point where the general fund won’t be able to keep up with other needs.

A proposal from the group that includes tax experts as well as lawmakers isn’t expected to come until after a series of options are reviewed, and will need the support of the House and Senate Republican supermajorities to go forward as recommended legislation.

With the Legislature’s interim meetings not winding up until mid-November and the 2020 general session set to start in late January, there’s still time for another special session to be called to tackle tax reform, legislative leaders say.

“I think we’re still on track,” said Senate President Stuart Adams, R-Layton, adding that it’s his preference that tax reform be dealt with in a special session rather than waiting until next year. “It would be nice to get that behind us and move on to other things.”

But Adams said that’s a tall order. Last session’s abandoned tax reform legislation would have imposed new sales taxes on services to broaden the base, a move that drew protests from the business community. Another high-profile option, to repeal the constitutional earmark on income tax revenues, already has opposition.

Still, the Senate president said he believes a lot of work is being done by the task force, which held eight town hall meetings on tax reform around the state over the summer.

He said he hopes that by October the task force will have settled on a proposal to bring to the GOP caucuses in the House and Senate. The last scheduled meeting of the task force is on Oct. 2, two weeks before that month’s interim day meetings when lawmakers hold caucus meetings.

“I think there’s a chance we can get there. It’s still on the front burner,” Adams said of a special session on tax reform. “There are a lot of great ideas. If we can coalesce around a group of them, we can move fairly quickly. ... But I’m not going to say we’ll get it done.”

House Majority Leader Francis Gibson, R-Mapleton, the task force’s co-chairman, didn’t rule out a special session on tax reform.

“The bottom line is we will come up with what we feel will give us the most flexibility with the budget,” Gibson said. “Is it special session or is it general session? I’ve been pretty consistent about that. I’m not going to be held to an artificial deadline.”

The governor is waiting for lawmakers to reach a consensus on tax reform before talking about another special session, his spokeswoman, Anna Lehnardt, said.

“It’s too early to say, honestly, on a special session on tax reform,” Lehnardt said. But if legislative leaders are able to say there’s support for a tax reform proposal or package of proposals, “then we’ll have that conversation with them.”