No tax cut for Utahns

Although the state has more than $370 million in tax revenue growth and hundreds of millions more in one-time cash surpluses, don't expect any general state tax cuts this year, Gov. Jon Huntsman Jr. and legislative leaders said Thursday.

House Speaker Greg Curtis and Senate President John Valentine say Utah's healthy economic rebound from several years of poor tax revenue should be spent on making up for no state employee pay raises in recent years, in addition more cash should be pushed into deteriorating roads and badly needed buildings. Education funding must also be a priority, they said.

Huntsman agrees, said legislative liaison Mike Mower.

In the mid-1990s, when the Legislature had a half billion new dollars to spend, lawmakers and then-Gov. Mike Leavitt gave a $90 million property tax cut. Several years later, they cut state income taxes by tens of millions as well.

But now, "We have pressing problems," Curtis said.

Lawmakers convene Jan. 17 and will adopt an $8-billion-plus budget for fiscal 2005-2006 before adjourning in early March.

Mower said Huntsman, who took office Monday, will make his budget recommendations next week. "We want some tax reform, but no general tax cuts. We have needs in roads, education and other areas."

Sen. Howard Stephenson, R-Draper, who is president of the Utah Taxpayers Association, said he's not disappointed that leaders aren't supporting a general tax cut, "as long as they are not prohibiting (consideration) of giving some targeted tax cuts as part of overall tax reform. We need to stimulate this economy."

Said Mower: "Tax reform is key to economic growth." And Huntsman will expect some such "reform" from the 2005 Legislature.

Will that mean some "targeted" tax cuts, like the association-supported sales tax exemptions on some materials and service purchases by businesses or elimination of the corporate income tax? "We'll have more to say on that later," Mower said.

The House GOP leadership has formally taken a position of no general tax cuts, Curtis said. Leadership would like some $40 million of ongoing tax money to go to general state programs that this year were being funded by one-time surpluses; another $125 million going into roads and buildings.

The remaining $200 million in tax growth for fiscal 2005-06 (FY 2006) is a healthy amount, said Curtis, "but not overwhelming" when looked at historically.