And so, the time has come for Utah tax reform, version 3.
We hope this time lawmakers and the governor find ways to solve the state’s growing tax imbalance that do not disproportionately hurt low-income Utahns, and we hope they are more transparent as they draft this solution.
The first version of tax reform died in the closing days of the last legislative session, as a bill drafted behind closed doors and introduced with two weeks left before the closing gavel met sudden and intense opposition from professional groups that were about to be taxed for the first time.
The second version died Thursday morning, after organizers of a petition drive to overturn a reform bill passed in a December special session turned in what appeared to be more than enough signatures to put a repeal measure on the ballot in November.
Gov. Gary Herbert, Senate President Stuart Adams and House Speaker Brad Wilson issued a joint statement Thursday, two days after the signatures were handed to the lieutenant governor’s office, announcing they would introduce a bill Monday to repeal the reform law they passed in December.
That is the right decision, and they deserve applause for so quickly responding to what was a strong expression of the collective will of Utahns.
The decision is a practical one, as well. The way Utah’s referendum law is written, the governor cannot put a hold on the new law while awaiting the lieutenant governor’s decision as to whether the petitions contain enough valid signatures. The law also allows people 45 days in which to remove their names from those petitions, further adding to the uncertainty. The alternative to repealing tax reform would have been to allow it to become law, potentially for only a short period of time.
Because the law contains tax reductions in some areas, tax hikes in others, tax credits and one-time checks to many qualifying people, letting the law take hold for a short period of time would have created a mess.
But now lawmakers once again are confronted with the difficult task of fixing the state’s imbalance, in which income taxes, all of which are earmarked for education, are growing much faster than sales taxes, which fund all other government services and programs.
Their original plan of broadly taxing services ought to remain on the table. So should the idea of allowing voters to decide whether to remove the education earmark from the income tax. The measure to add sales taxes to gasoline, a part of the law that passed in December, should remain under consideration, as well.
All three would anger certain constituencies. But the reality is that effective solutions cannot be found without creating friction in some area or other of the economy.
One thing that ought to be taken off the table, however, is the idea of raising the state’s sales tax on groceries. That item, more than any other, seemed to rally Utahns in opposition. It was seen, rightly, as harming those least able to pay.
With an open and transparent process, perhaps other, more innovative, solutions will emerge, as well.
By essentially forcing a repeal of the second version of tax reform, Utahns have shown that democracy and civic participation work. That is worth celebrating. Now they need to show that it can work to find solutions, as well.