Huntsman brokers a tax-cut deal

Just as it looked like the 2006 Legislature would end at midnight next Wednesday without a final budget, Republicans in the House and Senate have accepted a $160 million tax cut package brokered by GOP Gov. Jon Huntsman Jr. that will reduce both the sales tax on food and state income tax rates.

The deal — described by Senate President John Valentine, R-Orem, as a "framework" for cutting taxes — was reached Thursday after a long series of closed-door meetings. A joint press conference is scheduled today for its announcement.

No one wanted to talk publicly Thursday about the details of the deal, likely out of fear it might fall apart overnight. Senate leaders simply announced there was agreement; House leaders declined to comment at all.

The Deseret Morning News, however, has learned the deal will:

• Slice 2 percentage points from the state's 4.75 percent share of sales tax on food, about a $70 million tax cut.

• Reduce income taxes $70 million by lowering rates and limiting deductions and exemptions.

• Cut business taxes by $20 million as an economic development tool.

A spokesman for the governor, his deputy chief of staff, Mike Mower, confirmed "negotiations are taking place in good faith, and we're optimistic there will be a good result" as the final pieces of the fiscal 2006-07 $9.6 billion budget are fit together.

Legislative sources told the newspaper Thursday night that the total tax-cut/reform package is $160 million — just about midway between the $100 million Senate Republicans said the state could afford and the $230 million their House counterparts insisted should go back to taxpayers.

As in all compromises, no side got all it wanted.

House conservatives wanted a $230 million tax cut, in part to slow growth in state government. With more than $500 million in new ongoing tax revenues, "we had an opportunity at tax cuts and tax reform" that may not be seen again, one disappointed House member said.

Removing 2 percent from the food tax — which tops 6 percent in many counties — is well short of Huntsman's and House Republicans' desire to remove all of the sales tax from unprepared food.

Huntsman, who had put just $60 million in tax cuts in his $9.6 billion proposed budget, joined the House in calling for the sales tax to be removed from food purchases.