As Utah shifts from a goods-based economy to a service-based economy, the amount of taxable purchases based on our current tax structure has drastically decreased. In the 1960s, 55 percent of Utah’s tax base was represented by taxable purchases; today, it’s less than 40 percent.
In 1996, higher education was completely funded by the general fund, which is derived entirely from sales tax. Today, higher education may only receive 2 percent of the general fund. We cannot continue to use our education fund to pay for services and functions meant for the general fund. The long-term financial health of our state is in jeopardy. We need to look at our long-term fiduciary responsibility so we can continue to be, and be recognized as, the most fiscally responsible state in the nation. We have to balance our fiduciary responsibility to ensure we have funding for education, Medicaid, transportation and many other essential programs with the concerns of Utah business owners and taxpayers. We heard the concerns from constituents, business owners and community leaders. We value your input and your desire to participate in the legislative process. While we will not be moving forward with HB 441, Tax Equalization and Reduction Act, this legislative session we are committed to working together to find a solution to stabilize our tax structure. Our goal is to continue to have a business-friendly environment while making sure everyone is paying their fair share of the taxes required to support the funding of essential programs in Utah. We encourage you to continue giving us your feedback and input to help guide us as we continue to deliberate on the best tax policy for Utah. Today, we held a press conference to discuss tax reform. The following are comments from Senate President Stuart Adams and Senator Lincoln Fillmore. Watch the press conference here.
President Stuart Adams speaks at the tax reform press conference.
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We stand here, united in understanding we have a problem and with a desire to solve it. I remember in the 1990s, when 70 percent of our GDP was generated through sales tax. Sales tax is part of our general fund, and it provided a lot of revenue for the state. Income tax is used, in its entirety, to fund education. What runs the rest of the state is our general fund.
In the 60s and 70s, 70 percent of the goods and products we bought generated sales tax; today, only 40 percent does. We are working on how we budget money. This year, we are looking at transferring potentially $200-$300 million from the education fund to our general fund because our general fund is not growing at the same pace as our population. It’s not a sustainable practice. We’re committed to making sure Utah economically stable and fiscally responsible.-President Stuart Adams
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Senator Lincoln Fillmore offers his thoughts at the tax reform press conference.
This process really works. We started almost a year ago; we do research, try to find solutions, we refine our thinking, gather data, look at proposals, look at more data, we refine those proposals. Eventually, those proposals make their way into legislation, it’s released publicly, it engages the whole state; we learn more and gather more data. The public helps us to see what potential real-world consequences might exist out there we hadn’t previously considered, which helps us to refine our thinking. The process works and will continue to work over the next several months.
We thank the public for their engagement on this issue. We’re committed to keep working with all stakeholders to solve the problem we’ve talked about with the need for tax reform. We will work to craft the right policy to make Utah the best place to do business and the best place to live in the country. We want to make sure we grow the economy, and we provide security for and ease the burden on taxpayers. -Senator Lincoln Fillmore Tags: adams, fillmore, HB 441, Senate President Stuart Adams, tax reform, utah legislature, utah senate