SALT LAKE CITY — Kicking off the first day of the 2020 Utah legislative session Monday, House Speaker Brad Wilson’s opening speech addressed what he called the “elephant or, to be bipartisan, the donkey in the room,” the public backlash against tax reform.
With the likely success of a referendum on the tax reform package to reduce state income taxes while raising sales taxes on food, gas and some services that was passed in a special legislative session last month getting on the November ballot, legislative leaders and Gov. Gary Herbert announced it would be repealed quickly.
A vote on HB185, a bill introduced Monday to repeal the tax reform package, is expected Tuesday. Both Wilson, R-Kaysville, and Senate President Stuart Adams, R-Layton, have said work on a new plan to deal with lagging sales tax revenues will wait until the 2021 Legislature.
Wilson warned about the dangers of lawmaking by referendum.
”Legislation by referendum, while part of the political process, can be divisive and at many times be short of facts,” he said. “It has proven ruinous for many states that have turned down that path, turned away from the basic principles of a democratic republic.”
Wilson also urged lawmakers to find new ways to both listen to constituents and explain complex issues to them.
”Our neighbors elected us to immerse ourselves in the details of each policy, weigh the various interests, drawbacks and benefits. This is a significant amount of trust that has been placed on us,” Wilson said. “But on many complex issues, our constituents are an essential part of that process.”
They “play an important role in shaping the policy decisions that we make, and their voice is important. We must find new ways of both listening and explaining to our constituents the issues that we face and the decisions we make to address them,” the speaker said.
”As I’ve said before, we are not foes on the political battlefield,” Wilson said. “We are all Utahns committed to getting public policy right.”
The Senate president focused on the Legislature’s role in making the state’s economy strong, but did not directly address tax reform in his opening speech.
“Utah leads the nation in tax and regulatory policy and this Legislature sets that policy. So having the best economy in the nation is a result of your great work,” Adams told senators, acknowledging that when they are called upon to make tough decisions, they’re able to rebound when things don’t work.
“We do hard things and Utah does well,” the Senate leader said. “Nothing good just happens.”
Adams later told reporters the repeal bill will go directly to a vote without a committee hearing.
“We pretty much heard from the people. We listened to them,” he said, suggesting tax reform might be an easier sell as the state’s budget imbalance intensifies. “I wondered if we were too early because sometimes you need urgency. You need the sky to actually fall before maybe people realize that we’ve got a problem.”
The repeal bill, announced last Thursday by Wilson, Adams and Herbert, comes as the number of voter signatures verified on the referendum hit 111,188 as of Monday afternoon, closing in on the nearly 116,000 needed from around the state to qualify for the November ballot.
Fred Cox, the former Republican state lawmaker who led the grassroots effort against the tax reform package, stopped short of saying whether he believes the repeal bill would end the referendum.
“Good question,” Cox said. “We still want the signatures to be counted.”
County clerks have until Feb. 4 to finish verifying the voter signatures turned in by the Jan. 21 deadline. State Elections Director Justin Cox said voter signature totals will continue to be updated on the vote.utah.gov website.
The repeal bill requires the support of two-thirds of both the House and the Senate, but legislative leaders said that won’t be a problem. The special session tax reform package was vulnerable to a referendum because it fell short of a two-thirds majority even though Republicans hold supermajorities in both chambers.
“I think we need to rethink this because the people have spoken,” said Senate Minority Leader Karen Mayne, D-West Valley City, a member of the Legislature’s tax reform task force. “This is a learning experience for all of us. So I think we need to listen to those that vote for us and those that live in the state.”
One of the Republican lawmakers who joined Democrats in voting against tax reform, Rep. Tim Quinn, R-Heber City, said because of the referendum, repeal is now the only option.
“At this point, no matter what you think about the tax reform, we have no choice. We have to budget. So we can’t wait until November to do that so it has to be repealed,” Quinn said, because that’s when the referendum would be on the ballot for voters to decide whether to retain or repeal tax reform.
Lawmakers must put together a budget over the 45-day session for the fiscal year that begins July 1. The repeal bill, expected to be voted on Tuesday, would add back $160 million in revenues that had been set aside for an overall tax cut, money that may end up being set aside for next year’s attempt at tax reform.
House Majority Leader Francis Gibson, R-Mapleton, told the Deseret News the tax reform repeal bill will pass in a vote on the House floor Tuesday and be sent straight to the Senate, where it is also expected to be approved. The governor has promised to sign it into law by the end of the week.
Gibson, who was the House chairman of the tax reform task force, said he was “frustrated” — not with the referendum, but with what he called “half truths or lies” that he said some referendum supporters used to gain support.
“But hey, you know what,” the majority leader said, “they have their signatures and we’ll move on.”
Rather than trying to push through another tax reform package in 45 days, Gibson said lawmakers likely won’t take up the issue until 2021, following an election year for all members of the House and about half of the Senate. Utah will also elect a new governor, since Herbert is not running for reelection after more than a decade in office.
Gibson said it’s too soon to say what the next bill will include, and whether there will be a future attempt to boost sales tax on food, which seemed to be the source of most of the public’s outrage. Two grocery chains, Harmons and Associated Foods, backed the referendum and allowed signatures to be collected in their stores.
The task force’s Senate chairman, Sen. Lyle Hillyard, R-Logan, said an alternative might be to not raise the state’s 1.75% state sales tax on food as much. Another alternative, he said, is reducing state spending as growth in the general fund that depends largely on sales taxes continues to shrink.
“That’s really an option, budget cuts. If we don’t have the money, we don’t’ have the money,” Hillyard said, noting the general fund pays for most state needs. “But the minute you do that, then these advocates will all say, ‘You’re being vindictive. You’re just sitting on the money.’”
Hillyard said he, too, was disappointed in what he said was misinformation about tax reform and was “discouraged” that the plan he’d spent so much time putting together was being reversed. “But I’m a good loser,” the longtime senator said, adding he wants to be a part of next year’s tax reform effort.
Gibson laughed when asked whether he’ll be among the legislative leaders to help draft a new bill. He said his involvement depends on winning his reelection. If he keeps his seat, Gibson said he’ll likely be involved due to his experience with the issue, but it’s “not something I’m asking for.”
“It’s been a painful nine months,” Gibson said, referring to the process that led up to the special session legislation. The task force was formed after a bill sponsored by Quinn in the 2019 Legislature to impose new sales taxes on a wide range of services was pulled amid protests from the business community.
Gibson defended the tax reform plan that was passed, saying there’s “irony” that critics of the bill said it was rushed even though the Legislature’s tax reform task force spent months, with more than a dozen public meetings and hours of public testimony, to draft the bill.
As to why it failed, Gibson wouldn’t point fingers.
“I’m not pushing the blame onto anybody,” he said. “Things happen. It’s part of the referendum process. ... 150,000 people put their name on a piece of paper for one reason or another, and we’ll repeal the bill and just keep going forward.”
Aside from tax reform, the Utah Legislature faces a slew of other issues this year, from lowering Utah’s suicide rate to managing growth in a booming economy.
Much of Wilson’s speech revolved around Utah’s evolving economy, rapidly growing population, and that lawmakers will “face significant issues, and how we address these issues will significantly impact the direction of our state for years and decades to come.”
Wilson urged lawmakers to remember three core Utah values throughout the session to ensure state success, including prioritizing ways to keep the state’s economy thriving, policy to help reduce Utah’s suicide rates, and remembering how faith has long been a “bedrock element” of Utah and is a “key ingredient of the success of our blessed state.”
Wilson became emotional, at one point pausing to wipe away a tear, when talking about Utah’s suicide rate, noting there will be several bills this year focused on mental health.
“May our path forward be paved by industry, may our actions be defined by compassion, and may our path be illuminated by faith in God and faith in one another,” Wilson said, concluding his speech. ”Now let’s get to work.”