Budget could include tax relief for third consecutive year
It’s déjà vu all over again — Utah legislative leaders are recommending tax cuts for the third consecutive year, a reduction that would total $400 million in fiscal 2024.
The Legislature’s Executive Appropriations Committee (EAC) also is proposing the allocation of more than $1 billion for transportation and transit improvements, $775 million for debt reduction and debt avoidance and nearly $428 million for water projects. If the budget is approved, education will get nearly $1 billion — $578.3 million in ongoing revenue and $338.7 million in one-time funds — an almost 20% bump.
The proposed budget totals nearly $28 billion, the largest in Utah history.
Rep. Robert Spendlove, EAC vice chair, said a major reason for the budget size is inflation.
“We collect more in taxes but everything we do costs more, too,” the Sandy Republican said.
Lawmakers will be refining the budget during the last days of the legislative session, which ends when the clock strikes midnight Saturday. The 2023-24 budget year begins July 1.
Senate President Stuart Adams said in a news release legislators are thinking not only about the fiscal year in crafting the budget but also planning for the next 100 years.
“We are funding solutions to our growing state’s most pressing needs, and cutting taxes while looking ahead to avoid future pitfalls,” Adams said. “We are providing immediate tax relief to Utahns at a time when they need it most. By making smart fiscal decisions, Utah’s economy will continue to remain steadfast.”
‘Historic’ tax cuts
Republican legislative leaders describe the tax cuts as historic. In the previous two years, taxes were reduced by almost $300,000.
This year’s proposal calls for a decrease of the income tax rate for all Utahns from 4.85% to 4.65%, which would give an average family of four making $80,000 a year a $208 reduction in tax liability. Low-income households would get an approximate 22% cut, middle-income households would get about a 6% cut and high-income households would get about a 4% cut, according to the GOP leaders.
The EAC also recommends expanding Social Security tax credit eligibility to people earning up to $75,000 a year; providing a tax benefit for pregnant women by allowing a double dependent exemption for children in the year of their birth; and increasing the earned income tax credit from 15% to 20% of the federal credit.
In addition, the potential budget includes allocations of $53.4 million in funds and $44.5 million in one-time money for a low-income housing tax credit.
Gov. Spencer Cox’s released a proposed budget in December with a $1 billion in tax relief. The governor recommended providing nearly $300 million in new, ongoing income tax cuts and $574 million in one-time tax relief, as well as maintaining the expiration of a basic levy freeze.
The proposal also recommended a reduction of the income tax rate that is smaller than that recommended by the Legislature, from 4.85% to 4.75%. Because the Taxpayer Tax Credit — a credit against Utah tax based on the total of a taxpayer’s Utah exemptions and adjusted federal itemized deductions or standard deduction — can erase the income tax liability of many low-income households, the benefits of reductions primarily go to upper- and middle-income households, Cox’s proposal said.
“As such, the governor also recommends that this rate cut be paired with a modification of the Taxpayer Tax Credit in order to provide inflation relief to lower-income households, which mainly miss out on the benefit from a rate cut,” the proposal said.
Rep. Joel Briscoe, D-Salt Lake City, said he’s not against tax cuts but he wants them to target the people most in need and the EAC proposal principally benefits the wealthy.
“There are many Utahns who could use their tax burdens lowered as opposed to the top few percentage points of Utah wealth,” he said.
Briscoe is the sponsor of House Bill 480, which would create a child tax credit, and House Bill 260, which would increase the number of people eligible to get help paying their property taxes.
“A lot of people’s homes got very expensive and valuable in the last two years but some people are on fixed incomes and it’s more difficult for them to pay,” he said.
House Bill 260 passed out of the Senate Revenue and Taxation Committee last week and is awaiting the first of two votes in the full Senate. HB 480 was never assigned a committee.
Raises for teachers
The proposed funding for education includes $239 million for teacher raises and scholarships for private schools and home schooling. The pay bumps and voucher/scholarships were linked in House Bill 215, which was rushed through the Legislature and signed by Cox in the first week and a half of the session.
Among other recommended allocations for education are a 6% increase in per-pupil funding, which totals $236 million; $92 million for a permanent state school fund; $50 million for a small school critical capital needs fund; $30 million in flexible funding for schools in rural counties; and $25 million in ongoing money and $586,500 in one-time money for an increase of at-risk students.
Education programs that would be funded and their cost if the proposed budget is approved are flexible school safety, physical facility and capital needs, $75 million; educator preparation and collaboration time, $64 million; teen centers for students experiencing homelessness, $15 million; and Grow Your Own Teacher and Counselor Pipeline, $7.1 million.
Also proposed is a $25 million allocation for the expansion of optional full-day kindergarten.
“This year the Legislature will be fully funding optional all-day kindergarten, which is something that we’ve been working on for over 20 years and this is the year that we’re going to be able to do it,” Spendlove said.
The total cost of the program is $97 million a year. More than a third of the amount was previously funded and in addition to the $25 million allocation, the state is repurposing savings from student enrollment growth to help pay for the expansion.
“Putting all the pieces together has been difficult to do but we really wanted to make that long-term commitment to the program,” said Spendlove, who sponsored House Bill 477, which makes full-day kindergarten available for all local education agencies with an option for half-day kindergarten.
Water conservation
Lawmakers are recommending funding for water conservation measures, infrastructure improvements and the position of a Great Salt Lake commissioner who would prepare a strategic plan for the long-term health of the lake.
Under the proposed budget, the Office of the Great Salt Lake Commissioner would receive $10 million in one-time money and $2.5 million in ongoing funds. Agricultural water optimization efforts would get $200 million and $25 million for water optimization loans.
The lawmakers are recommending allocations of $50 million for water use and desalination, $30 million for water infrastructure projects, $25 million for dam safety upgrades and $15 million in secondary water meters. In addition, a cloud seeding program would get $7 million in one-time money and $5 million in ongoing money; $5 million would go toward Utah Lake improvements; and Utah Water Ways, a new nonprofit, statewide partnership addressing water, would get $2 million in one-time money and $1 million in ongoing funds.
Road and transit projects
Utah is one of the fastest-growing state in the country so the Legislature wants to make long-term investments in transportation, Spendlove said.
Recommended budgeting includes $800 million for Utah Department of Transportation projects; $200 million for commuter rail improvements; $150 million for Cottonwood canyons transportation improvements; $108 million for Point of the Mountain development; $88.5 million for Highway 191 safety improvements; and $40 million for rural highway projects.
Other funding highlights
The Legislature also is recommending these allocations:
Affordable Housing/Homelessness
● $53.4 million in ongoing funds and $44.5 million in one-time funds for the Utah low-income housing tax credit
● $50 million to implement a first-time homebuyer program (Senate Bill 240)
● $50 million for deeply affordable housing
● $12 million for homeless services dedicated funding
● $10 million for the Utah Housing Preservation Fund
● $7 million for a Box Elder County crisis shelter and transitional housing
● $5 million for attainable housing grants
● $5 million for the Shared Equity Revolving Loan Fund
● $4 million for affordable housing technical assistance
● $2.75 million for the Rural Single-Family Home Land Revolving Loan Program
Parks/Recreation
● $45 million to develop a statewide trails network (Senate Bill 185)
● $40 million for Utah Olympic Legacy Foundation facilities updating
● $15 million for the Antelope Island Visitor Center
● $14 million for supplemental funding to complete phase one of Utahraptor State Park
● $10 million for Zion multimodal transportation infrastructure
Social Services
● $25 million for Wasatch Canyons Behavioral Health Hospital
● $12 million in ongoing funds and $12.5 million in one-time funds for victim services
● $5.4 million in ongoing funds and $3.4 million in one-time funds for jail contracting (Senate Bill 114)
● $4.5 million in ongoing funds and $895,000 in one-time funds for equal Medicaid reimbursement rate for autism
● $3.9 million in ongoing funds and $977,300 in one-time funds for postpartum Medicaid coverage amendments
● $3.5 million in ongoing funds and $1.8 million in one-time funds for services for the people with disabilities waiting list
● $3 million for domestic violence shelter-based support services
● $1.7 million for medical loan repayment incentives to be in underserved areas
● $1.4 million for caregiver compensation
Mental Health
● $6 million for the Huntsman Mental Health Crisis Receiving Center
● $5 million for mental health resources for first responders
● $1 million in ongoing funds and $1 million in one-time funds for mental health services for LGBTQ youth
