For a brief moment this past winter, the Utah government had its pockets brimming with taxpayer dollars—about half a billion in surplus that had no designated destiny. It was great news for state coffers, and a strong sign of a growing economy. But the money didn’t last long. As the snow melted away, so did the cash which was quickly spent down to nothing.
The legislature decided to “return” some of this money to hardworking Utahns in the form of a small tax cut, allowing taxpayers to keep a little more of their cash and spend it how they wish. But in the same piece of legislation, they supported tax increases in a number of areas.
In an attempt to avoid the major income and sales tax increases proposed by the “Our Schools Now” initiative, the Utah legislature rushed through a massive tax bill on the last day of the 2018 legislature session. The “compromise” bill includes some marginal tax cuts for individual income and corporate taxes—but don’t let that small cut fool you. This was a net tax increase to pacify those calling for more funding for public education.
Many Utahns will now be paying higher property taxes as a result of the bill. It freezes property tax rates for up to five years, which means that as property values increase, so will the amount of taxes you pay at a greater rate than normal. (Previously, the rate would automatically decrease as property values rose.) The bill also raised the caps on the amount of school district property taxes local governments can charge.
Legislative analysts estimated that by 2023, the state will be gaining about $125.6 million of additional property tax revenue per year due to the bill. This funding will be given to school districts with lower property tax bases in order to equalize school funding across the state.
As a final part of the compromise, the state promised they would place a question on the ballot, allowing voters to register their opinion on a 10 cent per gallon tax increase on gasoline. This would help cover the cost of roads to allow more funding to be transferred back to public education. Now, not only will property taxes inevitably rise, but the cost of transportation may have a dramatic price escalation if the measure is approved this fall.
The Legislature has already raised gas taxes twice in the last few years, making daily commutes more of a struggle for low income Utahns. This additional tax increase would likely hurt them the most.
Even if the gas tax isn’t approved, local option sales taxes could be increasing in the next few years in your city. There are statutory caps on how much local governments can collect in sales taxes, and that number was increased by .2 percent this past session. Now it’s up to your local governments to decide if they want to implement the increase or not.
The compromise bill already promises millions towards public education, and with the likelihood of a new internet sales tax being enforced alongside the state’s growing economy, the government should have no problem prioritizing funding for education in the future—without additional tax increases.
That approach would certainly be more of a conservative, responsible approach towards funding use, and one that many Utahns would be much more satisfied with.
With the total surplus now exceeding $800 million, don’t hold your breath for getting some of your money returned.