The lopsided distribution of power in the Utah Legislature brings to mind that old riddle about the 900-pound gorilla. Where does it sleep? Anywhere it wants.
In similar fashion, the Republican supermajority on Utah’s Capitol Hill enjoys unfettered capacity to pass its bills of choice, even though some measures might be highly controversial and distasteful to many Utahns.
During the first eight days of this year’s general session, GOP lawmakers pulled off a nifty maneuver that combined two at-odds issues in the same bill – giving much-needed raises to public school teachers and allowing vouchers/scholarships for private schools to be funded from public school dollars.
Then during the session’s last two weeks, GOP lawmakers dished up another double-scoop combo, this time making removal of the state sales tax on groceries contingent on voters approving a constitutional amendment to broaden the use of income tax revenue beyond public education and children with disabilities.
During the Feb. 22 House floor discussion of Rep. Judy Rohner’s House Bill 101, Democrat Rosemary Lesser floated an amendment to decouple the constitutional amendment from the state grocery tax.
Rep. Lesser had sponsored her own bill to remove the state sales tax on food (with the exception of candy), but House Bill 172 got parked in the House Rules Committee for the entire 45-day session.
“While I certainly agree with my colleague from Salt Lake County who has joined me in making this a priority … one way the state can do this is by removing quickly and simply at the cash register the state sales tax on food,” Lesser told her fellow House members.
Her amendment to Rohner’s bill would have done just that, giving low-income Utahns some extra cash to combat high grocery prices.
But Rohner’s bill had an 18-month delay because it hinged on voters approving the Constitutional amendment in November 2024 to order for the state food tax to disappear in January 2025.
During debate on the House floor on HB 101, Majority Leader Mike Schultz pointed out that state employees desperately needed pay raises this year and a $200 million decrease in the general fund (from removing the state grocery tax) would not allow that to happen.
“We’re losing and bleeding state employees left and right,” Schultz said. “We’re not keeping up with the current labor market, so we’re going to have to do large increases.”
Schultz went a step further, calling Lesser’s attempt to amend Rohner’s bill “the most irresponsible thing that this body would ever do.”
By preserving the link in Rohner’s bill between food sales tax removal and broader use of income tax, Schultz argued that it gave lawmakers the flexibility “to continue to balance our state’s budget.”
While acknowledging that Schultz made several good points about Utah’s budget challenges, Salt Lake County Democrat Jennifer Dailey-Provost defended Lesser’s attempt to give tax relief to low-income Utahns who need it.
“Those (budget) challenges exist regardless of where the food tax lands with our votes on this bill,” Dailey-Provost said on the House floor. “And I think that holding voters hostage over something that is highly controversial and should be considered on its own merits is a policy mistake.”
She also cautioned against conflating the importance of the food tax with eliminating the constitutional earmark protecting education dollars, calling it “political gamesmanship” on the part of Republican lawmakers.
Rohner’s bill passed the House 57-15 that day. And the Utah Democratic Party decried the GOP’s continued reluctance to remove the state sales tax on food.
“First, Republican politicians handcuffed crucial pay raises for our teachers to a harmful voucher program, and now they’re holding the removal of the food tax hostage unless voters give in to their demands and allow them to raid the education budget,” Democratic Party Chair Diane Lewis said in a Feb. 23 statement decrying their actions.
Rep. Lesser also weighed in on social media regarding the GOP’s dogged determination to link removing the food tax with significant changes in the use of income tax revenue.
“Where my sponsored bill would have ended the state sales tax on food on July 1, 2023 – a time where Utahns are bearing the brunt of food inflation – voters will have to wait until 2024 to vote on the proposed amendment,” Lesser said. “Helping Utahns who are struggling financially should never come at the expense of our public education.”
Ironically, on Feb. 28 Rohner’s HB 101 got held in the Senate Revenue and Taxation Committee and ended up snoozing in Senate Rules until the session concluded on March 3.
It turns out that Senate Republicans found another way to achieve the same result.
Sliding into home
As Rep. Steve Eliason’s House Bill 54 cruised into the final week of the session, language was added to his 88-page bill to remove the state grocery tax and still keep it contingent on voters approving broader use of the income tax at the ballot box in November 2024.
In the Senate Revenue and Taxation Committee on Feb. 27, Senate Sponsor Dan McCay described HB 54 as “somewhat of a moving animal” as he explained they were adding “must-pass language for the food tax contingency.”
His multipurpose bill reduced the income tax rate from 4.85 percent to 4.65, raised the exemption for taxing Social Security to $75,000, and also added five percent to the earned income tax credit.
After further tweaks back and forth, HB 54 officially cleared both chambers on March 2.
On Feb. 28, the Senate voted 22 to 6 to pass Senate Joint Resolution 10, which provides the mechanism to put the constitutionally-protected income tax changes to voters on the 2024 general election ballot.
If voters say yes, then the state’s portion of the food tax will disappear in January 2025.
But it won’t be the first time voters were asked to expand use of income tax revenues beyond public schools. In 2020, 54 percent voted in favor of Constitutional Amendment G to allow the fund to also cover children and individuals with disabilities.
So far, pushback from educators has been slow to surface.
In an “open letter” published in the March 5 Salt Lake Tribune, elementary educator Brittinie Gleave wrote that public schools tasked with providing free and fair education to all children should not be defunded.
Rather than privatizing education, Gleave wrote that the answer is to “investigate how much money is needed to fully fund public education and then give that amount, along with decision-making power, to those we elected to make them – school boards.”
In a recent media statement, the Utah Education Association said the organization’s position on SJR 10 is still being defined: “We will seek member input during our annual delegate assembly in April. Our goal has always been to ensure education funding in Utah is prioritized, protected and adequate through constitutional language and guarantees.”
The Utah Constitution is fairly clear about preserving public education, stipulating that it should be free from sectarian control. It also forbids any appropriation for “direct support of any school or educational institution controlled by any religious organization.”
The business-friendly Utah Taxpayers Association gave full-throated support to SJR 10 and making removal of the state grocery tax contingent on voters approving a Constitutional amendment to broaden use of the income tax.
“We think that was the exact way to do it,” Association President Rusty Cannon said by phone recently, noting that they wouldn’t support it “unless they did it that way.”
Cannon described sales tax revenue as a small revenue bucket compared to the “very large revenue bucket of income tax.”
“So you can’t give away $200 million from the sales tax or general fund while not getting access to the larger income tax fund to pay for everything else under the sun that government has to pay for,” Cannon said.
No Easy Answers
According to the National Conference of State Legislatures, states enjoyed significant revenue surpluses as they emerged from the COVID-19 pandemic.
But while income taxes delivered increased revenues, sales tax grew sluggish and inconsistent due to persistent inflation.
Also, not all tax cuts benefit everyone equally. Trimming a state’s income tax rate puts significantly more money back into the pockets of wealthier households, while eliminating the sales tax on groceries gives low-income families a more meaningful and immediate boost because they spend a higher percentage of their income on food.
Utah is one of 13 states that still tax food. In 2022, 20 states offered a sales tax holiday on purchases such as clothing, school supplies and computers – but Utah was not among them.
Those with lower incomes typically spend about three-quarters of their earnings on items that are subject to sales tax, compared to top earners who spend about one-sixth of their income on taxed items.
And now, the economy appears to be in uncharted territory.
In its 2023 Economic Report to the Governor, the University of Utah’s Kem C. Gardner Policy Institute described Utah’s economic future as difficult to predict: “The post-pandemic economy has altered many traditional economic relationships … it’s unclear if or when old patterns will return, or if new arrangements will chart a different economic course.”
More voices needed?
Matthew Burbank, political science professor at the University of Utah, weighed in on the odd-couple bills utilized by Republican lawmakers as bookends for this year’s session.
Rep. Candice Pierucci’s House Bill 215 – combining teacher raises with vouchers/scholarships for private schools – zoomed through both chambers and acquired the Governor’s signature within the session’s first two weeks.
“Ordinarily you would not put a pay raise for teachers along with something else – (the pay raise) would be one item or part of the budget,” Burbank said. “But they very explicitly said we really want ‘scholarships.’ So we’re going to package that along with something we think everyone else is going to want.”
The push to lift the sales tax off food is nothing new, Burbank added, but lawmakers have been reluctant to take action because they feel the need to find a way to replace that revenue loss.
However, he said it raises the oft-discussed matter of avoiding omnibus legislation by limiting bills to one topic.
“They may be a bit omnibus by packaging things together and giving people something they want with something they don’t really want,” Burbank said.
And he suggested that the Legislature’s lack of partisan balance could be standing in the way of thorough discussion and debate on crucial issues.
“For a group of people who claim they really care about public policy, it might be good to allow more public input, more robust conversation,” Burbank said. “And on particularly contentious issues, to not hold bills until late in the session.”
