Huntsman signs bill to reduce food tax

Two thirds of the major tax-reform initiative is complete.

Despite a push for a veto from Senate Republican leaders, Gov. Jon Huntsman Jr. signed HB109 Friday and officially reduced the state's portion of the sales tax on food by 2 percentage points. The cut will take effect Jan. 1, 2007, and is estimated to save Utahns $70 million at the grocery store.

Huntsman also signed three Senate bills that amount to $20 million in business tax cuts, primarily for "business inputs" that help Utah-based companies with the production of goods they later sell. The tax adjustments were the second part of the three-pronged tax-reform package worked out by legislative leaders and Huntsman in the final days of the recently completed general session.

The third part, a 4.975 percent "flatter" income tax that would save taxpayers $70 million, passed the Senate but failed in the final hour of the session in the House. It will get further discussion during a special session expected in May.

Senate President John Valentine, R-Orem, said that he was urging Huntsman to veto HB109 so that it could be discussed in tandem with the "flatter" income tax. He also would have liked to see the two proposals in one bill so that the legislators could vote on the tax cuts as a whole package.

"I really feel like it was a tactical error that we did not combine them into one bill," Valentine said. "But he (Huntsman) really feels that he can sell the flatter income tax on its merits."

House Speaker Greg Curtis, R-Cottonwood Heights, said that it did not make sense for the governor to veto the tax reforms that did pass, especially when what was needed to pass the revised income tax was education. He said that leaders and Huntsman would be putting together a "bipartisan" group of legislators to iron out the exact time for the special session and the final proposal.

"A lot of the questions about the flatter income tax were not from a stand of opposition but more from a lack of full understanding," Curtis said.

Huntsman spokesman Mike Mower said that signing HB109 was the culmination of something that began during the 2004 campaign, when part of the governor's platform was the removal of the sales tax on food. While he would like to see the remaining state's portion removed — and will likely push for it during next year's general session — it is not germane to discussions about the remaining $70 million in surplus money.

"For us, that's a landmark bill (HB109)," Mower said. "We're very pleased to remove half of the state's portion of the sales tax on food."

The tax-reform bills were among 106 bills signed by Huntsman Friday, and an additional 51 must be decided by Tuesday. Of those, "there are about a half-dozen" that the governor is considering vetoing, Mower said.

Other bills signed included HB12, which amended the laws for the Government Records Access and Management Act; SB245, which changed the rules for redevelopment agencies; and HB371, which will allow counties to use transient room tax money for projects such as a stadium for REAL Salt Lake.

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E-mail: jloftin@desnews.com