GOP sets $$ aside for tax cut

Utah Senate and House Republicans decided Tuesday to take $300 million "off the budget table" — money they want to spend instead on tax cuts and building new roads.

Now that the majority party has decided on a dollar figure, the most important work of the 2006 Legislature can be decided — what kind of tax cuts to give.

"We hope to have the big budget issues, like taxes, be decided by Friday," said House Majority Leader Jeff Alexander, R-Provo.

The latest shift by lawmakers leaves GOP Gov. Jon Huntsman Jr. scrambling to secure support for his package of tax cuts — a "fairer, flatter, simpler" income tax system combined with taking the sales tax off food at the cash register.

Huntsman, who already faces a $50 million shortfall between the price tag for the tax cuts and his $9.6 billion budget, may end up having to give up pushing for the sales tax to come off food entirely.

The governor is expected to meet as soon as today with both House Speaker Greg Curtis, R-Sandy, and Senate President John Valentine, R-Orem, to talk about the possibility of leaving the sales tax on food at the local level to side-step the impact on cities and counties.

"I don't know in any session that the governor can get everything he wants, but I think he can achieve his top priority," Huntsman's chief of staff, Neil Ashdown, said. Tax reform is at the top of the governor's list, Ashdown said, insisting "he's not moving away" from calling for the removal of sales tax on food.

Tuesday, the governor met privately with the 21 Republican senators for more than an hour to sell his income tax reform plan. When they all emerged from their closed-door session, senators asked to see an even larger tax cut than the $60 million package Huntsman pitched.

And the Senate GOP is not entirely sold on the need for tax reform. Valentine said there's a substantial split in the caucus, with some members favoring just a reduction in existing rates so no one ends up paying higher taxes.

Huntsman, accompanied by several of his top advisers, tried to sell GOP senators on his so-called H3 income tax reform package that would lower the state's top income tax rate to just under 5 percent for everyone and set credits for charitable giving and home mortgages at 50 percent.

The Senate GOP — which has already refused to go along with the governor's push to take the sales tax off food purchases — wants to know how low the rate would go if the price tag for the cut was $100 million.