Will Utah tax cut climb to 120 million?

The 2006 Legislature is steadily moving toward giving Utahns their largest state tax cut ever.

As higher education, public education and human service advocates worry about how their programs could be financially affected, conservatives in the House and Senate are talking about giving even bigger tax cuts than originally planned.

Legislators have already agreed to trim $70 million from the state sales tax on unprepared food. That 2 percentage point reduction takes effect Jan. 1. Another $20 million is going toward targeted business tax cuts.

But while lawmakers in the 2006 general session put aside another $70 million for personal income-tax cuts, lawmakers couldn't agree on how those cuts should be given.

Now Gov. Jon Huntsman Jr. and GOP legislative leaders have agreed to try to give those personal income-tax cuts through a "dual tax system."

While bills are being drafted for a possible mid-September special session that would allocate $70 million in personal income-tax relief, conservative legislators are promising to push for even a larger tax cut — as high as $120 million in the income tax.

"You bet there will be efforts to increase that tax cut," Rep. Greg Hughes, R-Draper, said Wednesday.

In June, the Utah Tax Commission said the state ended the last fiscal year with a $351 million tax surplus in the state's two main funds — the largest tax surplus in Utah's history. And conservatives are saying it should now be matched with the largest tax cut in Utah's history.

"Whether in the special session in September or in the 2007 Legislature, there will be efforts to lower that (income) tax rate. The $70 million is the lowest hurdle — it should be higher. The lower the rate, the more competitive Utah can be in economic development. And that is what we're looking to do," said Hughes, who chairs the informal Conservative Caucus, which numbers around 30 members of the 56 Republicans in the Utah House.

Standing against the rush to give even larger tax cuts are Democrats, a few moderate Republicans and special-interest groups that don't want to see too much money coming out of revenues that otherwise would go to public and higher education and Human Services.

And if majority Republicans are forcing tax-cut votes just weeks before November's legislative elections, "it is a wrong-headed concept," said House Minority Leader Ralph Becker, D-Salt Lake. "We are dealing with long-range tax policy. We should deal with it on its merits, not right in the middle of a campaign year."