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Tax Reform

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While revenues for education are up (Education Fund), the state has experienced much slower growth in revenues for other services (General Fund). Failed attempts to address General Fund shortfalls led the 2019 Legislature to pass HB495, creating a “Tax Restructuring and Equalization Task Force” charged to “study state and local revenue systems with the purpose of making recommendations to address structural imbalances among revenue sources.” The Task Force will hold town hall meetings around the state to solicit public engagement and ideas.

URGENT: Show support for public education at Tax Task Force meetings by attending and wearing #RedForEd--

  • Thursday, November 21, 5 p.m., Utah State Capitol House Building, Room 30 CANCELLED
  • Next Meeting: Monday, November 25, 4 p.m., Utah State Capitol House Building, Room 30

Resources to Understand Tax Reform


Draft tax reform bill calls for income tax cuts but gives no details on plan for education – November 7, 2019

Reported by Jay Blain

Dozens of teachers dressed in #RedForEd filled the hearing room as the Tax Restructuring and Equalization Task Force unveiled a draft bill for comprehensive tax reform. In his opening comments, task force chair Lyle Hillyard explained that the gas tax only generates enough to cover about one-third of road construction costs. He also said revenue is not growing as fast as the state’s population.

Sen. Curt Bramble commented that is not good process to see a bill reported in the media before the committee even sees it. He is frustrated about getting phone calls from constituents about reports in the media about contents of the bill when he hasn’t even seen it.

Legislative staff then presented an executive summary of the bill. The bill reduces the income tax rate from 4.95% to 4.58%. According to the summary, income taxes would be cut by $650 million, while sales tax revenues would increase by about $570 million, for an overall net tax reduction of about $80 million. A family of four earning $60,000 annually would see an estimated tax reduction of more than $320 under the proposal.

During public comment, UEA President Heidi Matthews read a statement endorsed by the Utah Public Education Coalition supporting principles for education reform. She also expressed concerns about draft bill. “The bill includes massive cuts to the Constitutionally dedicated revenue source for public education in Utah. This bill proposes no vision for the schools we want for our state and more importantly no public plan for demonstrating sustained increases in growing education funding for our students’ future. How can we even begin to make decisions about this proposal in the absence of a new funding plan for education?”

Matthews said the time frame for approving and implementing massive statewide tax changes is also problematic. “The Legislature has failed to make a case that warrants a special session in the next few weeks. Decisions of such magnitude require significant discussion. Without those discussions, holding any special session is premature.” (Hear Heidi's full comments.)

Michael McDonough, Granite Education Association president and a teacher at Woodstock Elementary School, said cutting education funding without resolving how that money would be replaced is like demolishing an old school that needs replacing while the kids are still in it instead of waiting for a new building to be completed. (Hear Michael's full comments.)

Caren Burns, a teacher at Beehive Elementary in Kearns became emotional as she described the impact raising the sales tax on food and adding new taxes to services will have on the low-income students she serves. (Hear Caren's full comments.)

Many others spoke to the bill, including advocates for the poor sharing concerns about increasing the food tax and service providers who object to increased taxes on their services.

The task force took no action during the meeting but plans to meet again on Nov. 21.


Introduction to Tax Reform by UEA President Heidi Matthews – August 5, 2019

UEA President Heidi Matthews encourages educators to get involved...



Task Force Presents First Proposals – October 23, 2019

Members of the legislative Tax Restructuring and Equalization Task Force presented a total of six tax reform proposals. On Oct. 22, the Task Force voted to move forward a single proposal. Salt Lake Tribune columnist Robert Gherke offered a somewhat gloomy analysis of the proposalFollowing is information and analysis about the proposal…

What the Proposal Would Do

  • Cut money available for education by more than $700 million

    • Reduce the corporate and individual income tax rate from 4.95% to 4.7% (-$396 million)
    • Expand the Utah dependent exemption from $500 to $2,500 (-$95 million)
    • Provide a tax credit for low-income taxpayers (-$146 million)
    • Increase the Social Security credit (-$18 million)
    • Move school lunch funding from the liquor tax to the Education Fund (-$55 million)
  • Increase revenue by about $630 million through tax increases, exemption limitations, etc.
    • Restore the full sales tax on food ($250 million)
    • Remove the wholesale motor fuel sales tax exemption ($240 million)
    • Tax several services not currently taxed ($65 million)
    • Shift school lunch funding from the liquor tax to the Education Fund ($55 million)
    • Add misc. exemptions and rental car tax ($22 million)
  • Remove the constitutional guarantee allowing income tax to be used only for public education
  • Establish “meaningful funding security for public education” (yet to be defined)

The Public Process

  • Two additional Task Force meetings are scheduled at the State Capitol House Building, Room 30
    • Thursday, Nov. 7, 4 p.m.
    • Thursday, Nov. 21, 5 p.m.
    • Bills will be drafted based on the task force’s proposals
    • There is speculation the bills will be considered in a Special Session sometime in early December

UEA Analysis and Next Steps

  • $700 million in cuts to education would be devastating for our students, teachers and schools
  • Restoring the full sales tax on food would be devastating for our most vulnerable students as well as many educators
  • Until we understand how legislators plan to “establish meaningful funding security for public education” we cannot know the full impact of this proposal (a meeting with legislative leadership will happen soon)
  • The process is far from finished. The UEA Legislative Team will…
    • Continue meeting with legislative leadership and key legislators to influence the tax reform proposals and outcomes
    • Work with other education partners to have strength in numbers in our positions
    • Keep UEA leaders informed
    • Be prepared to call on our members to take action as needed

UEA Delivers Tax Reform Concerns to Legislators – October 14, 2019

The UEA Legislative Team sent the following email to all state legislators on October 14, 2019:

Dear Legislator,

On behalf of Utah’s dedicated public school teachers and their students, the Utah Education Association respectfully requests you keep the following in mind as you develop and consider tax reform proposals:

  1. Education powers our economy.
    Tax policies must deliver sustainable and growing education investments in individualized student attention, the state’s critical teacher shortage, student health and safety, and equitable opportunities for every student no matter where they live. Besides providing a better education for our children, each dollar invested in education provides greater economic returns than equal investments in corporate subsidies or tax cuts.
  2. Any cut to income tax hurts students.
    The income tax that is constitutionally guaranteed to fund public education has not kept pace with student needs. Just a .05% reduction in the income tax rate, as we saw in 2018, means about $55 million less available for our students each year. We simply can’t afford to leave any child’s potential unrealized.
  3. Transportation shortfalls require a transportation fix.
    General Fund revenue gaps exist largely because the state has been unable to keep up with growing transportation demands. Don’t attempt to solve a transportation funding problem on the backs of school children.
  4. The state has a revenue problem.
    The needs of Utah’s citizens are growing while tax burdens are falling. There is clearly a need to continue to grow education investment, adjust sales tax collection for a 21st century economy and increase transportation revenue for a growing population.

It is not enough to simply maintain or “hold harmless” education funding. Our students need secure sustainable and growing education revenue sources.

Please feel free to reach out to any member of the UEA Legislative Team if you would like to discuss our concerns.

Sincerely,

The UEA Legislative Team 


Did You Know...More than $600 million in Utah sales tax was "earmarked" for transportation in 2019...and this number is growing? – September 26, 2019

Growth in Earmarked Sales Tax
(in millions)

In 2011, the legislature voted to send sales tax revenue growth to transportation, earmarking hundreds of millions of dollars each year that could otherwise be used for social services, public safety, higher education or other priorities. The Governor vetoed the bill, but the legislature overrode the veto.

Why is this important to education? Some policymakers claim that the best way to provide for Utah’s needs in transportation, social services or public safety is to end the constitutional guarantee that ensures 100% of Utah state income taxes goes to fund education. In reality, the legislature has hundreds of millions of dollars set aside in a transportation earmark that could be made available for these same needs.

Tax Reform Matters!

The educators of UEA remain committed to ensuring student equity and opportunity in today’s classrooms and for future generations. The Utah State Legislature is currently discussing major changes to the way it collects revenue and pays for state services, such as education. These changes will likely impact generations of students, so we must get this right.

It is critical educator voices are heard!


Did You Know...Reducing Utah's Income Tax Rate Just .05% Cuts Our Education Fund by $55 million? –September 26, 2019

30-Year Growth in Utah Income Tax
(inflation adjusted)

In 2018, the Utah Legislature reduced the state income tax rate from 5% to 4.95%. This seemingly modest change saves the average Utah taxpayer about $29 a year but is costing the students of Utah more than $55 million per year. That’s enough to add one aide in each school or to give every Utah teacher a $1,500 raise!

Utah’s income tax, which is constitutionally guaranteed to go to education, has increased as the result of deliberate economic policies designed to grow the economy. The promise of policymakers has long been that as the economy grows, so would the investment in public education. Cutting the income tax rate would reduce the amount available to keep that promise.

Tax Reform Matters!

The educators of UEA remain committed to ensuring student equity and opportunity in today’s classrooms and for future generations. The Utah State Legislature is currently discussing major changes to the way it collects revenue and pays for state services, such as education. These changes will likely impact generations of students, so we must get this right.

It is critical educator voices are heard!

Did You Know...Utah's Constitution Guarantees 100% of Income Tax Goes to Education? – September 5, 2019

Primary Source and Uses of State Funding 

The Utah State Constitution contains a guarantee made by the people of Utah to support the education of future generations of children.

Eliminating this constitutional guarantee, as some have proposed, would put K-12 resources at risk. Without the guarantee, our schoolchildren would be forced to compete for funding with all state expenditures, like social services, transportation and law enforcement, and also projects such as moving the Utah State Prison, the Lake Powell pipeline and the Inland Port.

Tax Reform Matters!

The educators of UEA remain committed to ensuring student equity and opportunity in today’s classrooms and for future generations. The Utah State Legislature is currently discussing major changes to the way it collects revenue and pays for state services, such as education. These changes will likely impact generations of students, so we must get this right.

It is critical educator voices are heard!


Education a Hot Topic at Tax Townhall Meetings – August 6, 2019

Teachers were out in force over the summer as the Utah Legislature conducted townhall meetings to discuss tax reform. The Tax Restructuring and Equalization Task Force held a series of eight revenue restructure meetings across the state, beginning June 25 in Brigham City and concluding July 30 in Orem.

“It is not an exaggeration to say the decisions resulting from the tax reform process have the potential to impact education funding for generations,” said UEA Government Relations Director Chase Clyde. “The Legislature needs to hear that tax decisions are important because ensuring sustainable growth in education funding is important. It is critical that the voices of educators are heard.”

Indeed, teachers were heard. Teachers wearing #RedForEd took the microphone in many of the meetings to express the need for protecting and growing education funding.

“Current funding of education is not meeting the needs of our students,” said Grand High School teacher Hank Postma at the Moab townhall meeting. “We’ve been told the last decade plus to be patient and let the economy grow and that growth will fund the needs of our students. Well, the economy has grown and rather than taking the opportunity to invest in our children, we are now looking at moving that money elsewhere.”

During the Davis County meeting, Weber School District teacher Maddie Williams said, “I’m here for the students, that’s why I teach.” She described the difficulties in teaching classes with a large number of students. “Those kids deserve to have a comfortable place to learn and without funding in the right places, we can’t do our jobs.”

While revenues for education are up (Education Fund), the state has experienced much slower growth in revenues for other services (General Fund). Failed attempts to address General Fund shortfalls led the 2019 Legislature to pass HB495, creating the Tax Restructuring and Equalization Task Force charged to “study state and local revenue systems with the purpose of making recommendations to address structural imbalances among revenue sources.”

Next steps in the process are yet to be publicly announced. Check here at UEA Under the Dome regularly for the most recent information, links and updated meeting details.


UEA: Utah tax policy should ‘grow public education investments in student success’ – May 30, 2019

The UEA released the following Issue Brief outlining its recommendations for tax policy solutions…

UEA Issue Brief: Utah State Tax Restructuring and Equalization

While revenues for education are up (Education Fund), the state has experienced much slower growth in revenues for other services (General Fund). Failed attempts to address General Fund shortfalls led the 2019 Legislature to pass HB495, creating a “Tax Restructuring and Equalization Task Force” charged to “study state and local revenue systems with the purpose of making recommendations to address structural imbalances among revenue sources.” The Task Force will hold town hall meetings around the state to solicit public engagement and ideas.

The UEA SUPPORTS tax policy solutions that…

1. Grow public education investments in student success

  • It is not enough to simply maintain or “hold harmless” education funding. Our students need secure sustainable and growing education revenue sources.
  • We must safeguard and expand long-term resources available for public education such as provided by the Utah constitutional guarantee directing income tax to education
  • Policymakers should rely on teachers as experts when identifying what is needed to ensure student success.

2. Provide equitable resources for ALL students to learn and thrive

  • All students, regardless of zip code, deserve learning opportunities in safe schools, classes small enough for one-on-one attention and up-to-date learning materials/tools.
  • Students cannot learn when they are hungry, stressed or in pain. Families in need should be provided support services like nutrition, counseling and health care.

3. Allow the state to attract and retain qualified teachers and other school staff

  • We must invest in the root causes of the teacher shortage and support teaching as a sustainable profession.
  • We must ensure that every educator has the resources, mentoring and support they need to ensure student success.
  • Salary is critical, but resources must be provided to address other stress factors driving teachers from the profession such as:

class sizes well beyond recommended norms for optimal student learning;

over-focus on standardized tests that take up valuable learning time;

lack of classroom support (counselors, librarians, paraeducators, etc.);

increasing student social, emotional and behavior issues; and

insufficient mentoring support for educators entering the profession.


- Printable version of the UEA Issue Brief: Utah State Tax Restructuring and Equalization (pdf)
- "Telling Your Story" about education funding (pdf)

Task force charged with tax restructuring holds first meeting, announces townhall dates – May 30, 2019

Tax Restructuring and Equalization Task Force (reported by Jay Blain): The first meeting of the Tax Restructuring and Equalization Task Force included a discussion of the process and announcement of tentative town hall meeting dates and locations, but included no public comment, policy action or discussion. Several teachers were in attendance wearing their #RedForEd.

After introductions, Rep. Mike Schultz gave a recap of the 2019 Legislature’s HB441. The bill would have reduced the income tax and expanded sales tax to many services. His summary was that there was not enough time to address all the concerns raised. He said the process worked.

Jonathan Ball, legislative fiscal analyst, gave a presentation to review the definition of the problem. They also shared a document explaining the vision and principles for the task force and a process graphic about public input.

Sen. Lyle Hillyard explained that the purpose of the town halls is not to debate but to get public input on options. He also said legislative staff will be developing a website for the task force where the public can enter comments, get information about the data and other items.

The tentative town hall dates, times and locations announced during the meeting are as follows, with specific venues to be named later (handout provided at the meeting):

  • Tuesday, June 25, Brigham City, 6 p.m.
  • Thursday, June 27, Salt Lake County, 6 p.m.
  • Friday, June 28, Richfield, 6 p.m.
  • Saturday, June 29, St George, mid-day (no specific time given)
  • Monday, July 8, Davis/Weber County, 6 p.m.
  • Tuesday, July 9, Roosevelt, 6 p.m.
  • Saturday, July 20, Moab, mid-day (no specific time given)
  • Tuesday, July 30, Utah County, 6 p.m.

Tax Reform In the News

Teachers, others raise concern about new tax reform proposal
Deseret News, November 7, 2019
“From our expert vantage point, the tax bill language is not fair, is not just and is not good for kids,” Utah Education Association President Heidi Matthews told members of the Legislature’s Tax Restructuring and Equalization Task Force, citing “massive” cuts that would be made in income taxes without a new plan for paying for schools.

State School Board urges lawmakers to maintain ‘a constitutional guarantee’ for education funding
Deseret News, November 7, 2019
Hours before a legislative task force was to consider the latest proposal to reform taxes, the Utah State Board of Education approved a statement that emphasizes the importance of “maintaining a constitutional guarantee for education funding.”

Tax reform bill proposes bigger income tax cut and new fuel taxes
Salt Lake Tribune, November 7, 2019
Legislative leaders have alluded to ongoing negotiations regarding a new funding source for schools, and a summary of the tax bill includes a reference to “holding public education harmless.” But no details on a potential funding structure to replace the education fund were included in the bill, or divulged during the tax force hearing.

Under current tax reform proposal, individuals would pay less but some businesses would pay more
UtahPolicy.com, November 7, 2019
At the very bottom of a new "summary" of the large draft tax reform bill are some interesting numbers: Individuals will actually get a $132 million tax cut, and businesses will pay $52 million more.

Editorial: Why Utah’s tax reform proposal is seriously flawed
Marina Gomberg, Salt Lake Tribune, November 2, 2019
There are several problematic parts making up the disastrous whole proposed by Rep. Francis Gibson and Sen. Lyle Hillyard, but there are two things in particular that seem at best like a reckless abandonment of our community values and at worst a purposeful attack on our lower income families.


Utah’s top earners would get the largest share of the proposed tax cut
Salt Lake Tribune, October 29, 2019
The biggest chunk, about 40%, of the tax relief under a proposal pushed by Utah’s Republican lawmakers would go to those making $113,000 a year and above. That’s about 20% of all income tax filers.

In our opinion: Don’t rush major Utah tax reforms
Deseret News, October 26, 2019
Whether most Utahns know it or not, their Legislature is on the verge of a tax overhaul so large it would touch many of them in ways that are not yet clear. The last thing the state needs is for this process to be hurried.

Editorial: Legislators offer tax cuts to imaginary friends
George Pyle, Salt Lake Tribune, October 26, 2019
Leaders of the Utah Legislature are planning a major assault on the state’s tax structure. Not only do they want to cut income taxes for the rich and raise sales taxes on the poor, they also plan to end the constitutional restriction that all state income tax revenues flow to public education.

Utah governor: Special session on tax reform ‘still on the table’
Deseret News, October 25, 2019
Gov. Gary Herbert said Thursday he’s ready to call lawmakers into a special session of the Utah Legislature before the end of the year to deal with tax reform, but only if the House and Senate can agree on a proposal.

Tax reform nears the finish line
Utah Policy, October 24, 2019
The Legislature's Tax Reform Task Force is quickly moving towards hard recommendations on substantially changing the state's taxing system -- either at its Nov. 7 or Nov. 21 meeting.

Editorial: Looking to get the gears moving on education? Start with this important step
A. Scott Anderson, Deseret News, Oct 24, 2019
The “big gear” in education excellence is quite simple — pay teachers more. Among the myriad proposals to boost public education achievement that have been suggested over many years, this is the structural solution that will produce results.

Editorial: The Utah Legislature’s tax scheme relies on faulty math, cowardly politics and misplaced priorities
Robert Gherke, Salt Lake Tribune, October 23, 2019
The biggest change would be to rewrite Utah’s Constitution to get rid of a provision that has existed since 1931 dictating that all income tax revenue be spent on education. The sponsors contend it will give legislators the flexibility to spend money on other critical needs without harming public and higher education.

A tax cut? A tax hike? New tax on candy and soda? Competing Utah tax plans emerge.
Salt Lake Tribune, October 22, 2019
The co-chairmen of a legislative task force have recommended a $75 million tax cut, combining a higher sales tax on groceries with a lower state income tax rate in order to smooth out a growing disparity between Utah’s sales and income tax revenues.

Legislators target December special session to pass tax reform package
Utah Policy, October 22, 2019
Utah legislative leaders are looking toward an early December special session to take up broad tax system reform sources tell UtahPolicy.com.

Despite pleas to 'don't rush,' Utah tax task force advances reform proposal
Deseret News, October 22, 2019
Nearly 30 people lined up at the Legislature’s tax reform task force meeting Tuesday night to voice their concerns about proposals for restructuring Utah’s tax system that include restoring the full sales tax on food, adding sales tax to gasoline purchases and services while cutting income taxes.

More Utah tax reform proposals surface, including tax on soda and candy
Deseret News, October 21, 2019
At least four other tax reform proposals have been submitted for a Utah legislative task force to consider, including everything from limiting the restoration of the full sales tax on food just to soda and candy, to imposing a statewide property tax that would bring in some $100 million.

Editorial: When it comes to tax reform, slow and steady wins the race
Deseret News, October 19, 2019
The plan is so vast and complicated that a special session now would feel as if the process were being hurried without adequate time for debate, amendment and, most importantly, public input.

Editorial: Latest legislative tax plan is more of a patch
Salt Lake Tribune, October 19, 2019
The summer-long legislative roadshow to present Utah’s tax problem to the citizenry was supposed to sharpen the focus. But the show — more PR event than listening tour — didn’t settle anything.

Utahns would pay new sales taxes on food, gas and services but less income tax under tax reform plan
Deseret News, October 18, 2019
A new state tax reform proposal released Friday that slices Utah’s income tax rate while slapping on hundreds of millions of dollars in new sales taxes on food, gas and services still means a tax break for most Utahns regardless of their earnings, the lawmakers who authored the plan said.

New Utah tax plan: Consumers pay more on groceries, gas, veterinarian bills, save money on children
Salt Lake Tribune, October 18, 2019
Large families — particularly those above the median income level — stand to benefit the most from a proposed tax overhaul that initially would cut Utah revenue collections by a combined $75 million.

Lawmakers will propose big tax cut, adding sales tax back on food in tax overhaul proposal
Utah Policy, October 17, 2019
Utahns would see upwards of a 10 percent cut in their state income taxes, along with some other income tax savings, in a comprehensive state tax system overall coming from this summer's Tax Reform Task Force, UtahPolicy.com has learned.

Polling shows Utah voters may not be on board with tax reform ideas|
Utah Policy, October 17, 2019
A GOP-dominated legislative task force will put forward later Friday some ideas on reforming the state's tax system -- seeking public comment in a hearing next week.

Utah tax reform leaders call for tax hike on groceries with some relief for low-income residents
Salt Lake Tribune, October 16, 2019
Two legislators leading the charge to overhaul the state’s tax system said their initial proposal will call for reinstating the full sales tax on food, a change that poverty advocates have decried as burdensome to the state’s lower-income residents.

Tax cut by the end of the year? Utah House speaker hopeful
Deseret News, October 16, 2019
Utah House Speaker Brad Wilson said Wednesday he’d like to see a special legislative session on tax reform before the end of the year so that a tax cut can be put in place at the start of 2020 — an election year for all House members and about half of the Senate.

Guest opinion: Takeaways from Utah’s tax town hall meetings
Heidi Matthews, UtahPolicy.com, September 5, 2019
While I appreciate the focus on education funding, I’m nervous for our students. A report recently released by the Utah Foundation finds that Utah may be falling short of its potential due to lack of education funding. What student potential are we leaving on the table by having the lowest funded schools in the nation? I hope this question comes up in the discussion. I also hope our elected policymakers will recall past promises that as the economy grows, income tax revenues will grow and thereby increase the revenue for public education.