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Despite referendum, tax reform bill might still take effect briefly

Lawmakers talking about repealing legislation headed for November ballot

Bret Chappell stamps the received date on packets of signatures for the Utah tax reform referendum at the Salt Lake County Clerk’s Office in Salt Lake City on Tuesday, Jan. 21, 2020.
Bret Chappell stamps the received date on packets of signatures for the Utah tax reform referendum at the Salt Lake County Clerk’s Office in Salt Lake City on Tuesday, Jan. 21, 2020.
Kristin Murphy, Deseret News

SALT LAKE CITY — Even if the citizens referendum to let voters decide whether to repeal tax reform is successful, the bill recently passed by the Utah Legislature to reduce income taxes while raising sales taxes on food, gas and some services could still become law — at least for a while.

Questions began surfacing Wednesday, the day after referendum backers announced they had more than enough voter signatures to qualify for the November ballot, about the more than a monthlong gap between when tax reform is set to take effect next month and mid-March, when Gov. Gary Herbert could put the changes on hold.

The gap may be leading to the repeal of tax reform during the 2020 Legislature that begins meeting Monday.

The Utah State Tax Commission is already working to update employer withholding tables to reflect the lower income tax rate in the bill, and February and March are when many low-and moderate-income taxpayers are due to receive rebate checks based on the increased income tax credit for dependents.

State Tax Commissioner Rebecca Rockwell said the agency is still moving forward.

“The tax commission has a constitutional duty to administer the state’s laws. So we have to act in accordance with our constitutional requirement,” Rockwell said. “Of course, we will continue to have discussions with both the executive and the legislative branch on the issue.”

Leaders may come up with a resolution quickly.

“Until there is clarity, the checks won’t be mailed,” Senate President Stuart Adams, R-Layton, said. He said Republican senators have already been talking about the impact of the referendum on tax reform and what their next steps should be.

Sen. Dan McCay, R-Riverton, said he wants to see the tax reform bill repealed so lawmakers can start over and avoid the need for a referendum vote in November. He said he wasn’t aware of the gap issue, but expressed concern about the law being allowed to take effect.

“What I think people need to understand is the Legislature is not in a position currently to not listen to the voice of the people,” he said, adding that the gap issue “would only exacerbate the problem” and creates a situation that he described as “messy, messy, messy.”

McCay said he believes there’s interest in a repeal. Despite Republican supermajorities in both the House and Senate, the tax reform bill was subject to a referendum because it failed to pass with the support of more than two-thirds of both chambers.

“I think that all options will be taken seriously, including the repeal. I think there are several of my colleagues that are interested in going back and revisiting the process” that led to tax reform, and working during the session to try “to come up with something the public can support.”

House Minority Leader Brian King, D-Salt Lake City, said Democrats likely would be on board with a repeal.

“We all voted against it,” King said. “I don’t think it takes much prompting for us to say, ‘Sure, we ought to repeal it.’ It wasn’t good in December and the people of the state have made it known how strongly they feel about it. ... It’s fair to say most legislators have been surprised to the degree the people of Utah have mobilized.”

House Speaker Brad Wilson, R-Kaysville, had no comment on the gap Wednesday.

In a joint statement about the referendum, the House speaker and the Senate president said “we recognize the current tax reform plan created concern for some Utahns and the Legislature remains committed to crafting solutions Utahns can be proud of while ensuring our state continues to prosper.”

The governor is believed to be looking at the gap issue, but also had no comment Wednesday. However, he is expected to talk about that as well as the impact of the referendum on Thursday, during the taping of his monthly news conference on PBS Utah.

County clerks have until Feb. 4 to verify the voter signatures that met Tuesday’s deadline. Under a new law, a voter has 45 days to remove their signature once it has been verified and posted online.

By 5 p.m. Wednesday, the state Elections Office reported more than 79,000 signatures had already been verified. It takes just under 116,000 voter signatures distributed proportionately among at least 15 of the state’s 29 counties to force a vote, and referendum organizers say they’ve turned in more than 152,000 and met the threshold in 18 counties.

State Elections Director Justin Lee said the verification rate for the referendum signatures is unusually high.

“It’s been consistently around 93-95% valid,” Lee said. “It’s very high. We usually see something around 70-75%. Anything over 80% is usually considered a very good validity rate.”

He said a few of the smaller counties — Beaver, Daggett, Duchesne, Emery, Kane and Wayne — have indicated they’ve verified all of the referendum signatures that were turned in, but it will likely take until the Feb. 4 deadline to finish the verification process statewide.