$60 million Utah tax cut?

Gov. Jon Huntsman Jr. will call Friday for $60 million in tax cuts next year as part of "reforming" the state's income tax and removing or reducing the sales tax on food.

Top aides said Wednesday that specifics of Huntsman's recommended 2006-07 budget — which will push state spending to more than $9 billion for the first time — will come with the governor's budget press conference Friday.

"Our feeling is a tax cut comes as they (lawmakers) tie into income tax reform and as they tie into (reducing or eliminating) the sales tax on food," said Mike Mower, deputy chief of staff and Huntsman spokesman.

Mower declined to give a number, but Huntsman is expected to earmark $23 million for the so-called H3 income tax reform plan that establishes a lower rate — 5 percent — for most Utahns while allowing tax credits for charitable giving and home mortgage interest.

The rest of the money set aside for tax cuts in the governor's budget — about $37 million — will go toward giving taxpayers a yet-to-be determined break on the sales taxes they pay on food.

That likely means Huntsman, who campaigned on taking the sales tax off food, will end up backing either reducing the state sales tax rate on unprepared food or offering an income tax credit or rebate to low-income Utahns for the food tax they pay each year.

Utah House Speaker Greg Curtis, R-Sandy in Chicago this week for national legislative meetings, said GOP House leaders want a bigger tax cut than what Huntsman will suggest. "I don't think that ($60 million) is sufficient tax relief. We think it should be more like $100 million, with half going to removing the sales tax from food."

Curtis has proposed removing the food tax completely, then raising slightly the state and local sales tax rates on non-food items to make up all but $35 million of the lost revenue. If $100 million in tax cuts is given, Curtis' non-food sales tax rate could be lower, with $50 million "going to some business tax relief" and income tax reform.

Senate President John Valentine, R-Orem, who has called for getting rid of the food tax, said "a more cautious approach might be better than a more aggressive approach" because he believes the growth in tax revenues might be slowing.

"It's not storm clouds yet," Valentine said. "It's just to a point where I'm a little nervous."

Even though the Senate leader said he wanted the sales tax taken off food, he said it might be better to make a start with, say, a tax credit for low-income Utahns. "If we can't take it all the ways off, maybe we can make a down payment with the tax credit," Valentine said.

Record surpluses