State surplus turns into fight over divvying up the budget

Too much money and not enough time may be the legacy of the 2006 Legislature.

With a billion-plus dollars in surplus revenue, state legislators discovered the truth of an old caveat: money does not bring happiness. From the beginning, budget negotiations seemed more like a poker game, especially in regards to tax reform — an issue in which Huntsman opened low, the House went all in, and the Senate attempted to call their bluff.

By the close of business, the sales tax on food, which House leadership and Huntsman tried to remove, was reduced by 2 percentage points at a cost of $70 million. Senate Republicans, who fought against removing the food tax, will get the business tax cuts they wanted — $20 million worth.

As for a proposed "flatter" tax, which would change the state income tax rate to somewhere close to 5 percent but eliminate most deductions, its fate was not expected to be determined until the end of business. If passed, it would amount to a $70 million tax cut.

A tired Senate President John Valentine, R-Orem, held out hope the final element of the compromise package would pass. "It looks like we're going to get, for the most part, our work done. If we can get the last of the tax bills over from the House," he said. "It's up to them to get them done."

The battle over taking the sales tax off food didn't end with the session at midnight. The governor has said he'll continue to fight to take it off, and does House Speaker Greg Curtis. GOP senators did back down Wednesday from their call for a non-binding question about taking the sales tax off food on the November ballot.

Senate President John Valentine, R-Orem, said the question was scrapped after the decision was made to change the effective date of the 2-percentage-point reduction in the food sales tax that's part of the compromise from July 1 to Jan. 1, 2007.

Some senators grumbled privately that the idea of going to the voters was ill-advised because it caught both the governor and House Republicans off guard, upsetting the compromise reached just last week. Sen. Bill Hickman, R-St. George, said the ballot question was proposed "out of frustration more than it was the heat of the moment" and had unintended consequences. "I don't think the intent was to offend either the House or the governor."

But that, Hickman and other senators said, is exactly what happened in the final days. The House ended up being so stirred up about rejecting the agreed-upon income reform package in favor of simply cutting rates that it looked like a special session would be needed.