Is the proposal to remove the sales tax from food a case of brinkmanship or a question of basic human fairness?
"Brinkmanship," says Bud Scruggs, Gov. Norm Bangerter's chief of staff. "Daring Utahns to pass it and then putting a gun to the head of the Legislature, threatening to fire if they don't raise taxes.""Basic fairness," says Peter Billings Jr., Democratic Party chairman, who says that he abhors the fact "that we tax the most basic commodity that all must have - food."
Bangerter and many Republican lawmakers oppose removing the sales tax from food, an initiative that will appear on November's ballot.
Billings and the Democratic Party support removing the tax, with the proviso that other taxes be raised if needed to offset losses to state and local governments.
Billings' compromise - call a special session now, before the election, and give an income-tax credit for food tax paid - has been rejected by Bangerter. However, the governor says he'll "lead the debate" on such a proposal when lawmakers meet in the regular January session. Bangerter says a food tax on poor and low-income people needs to be looked at, but he's making no promises.
Before the Utah Women's Forum, a non-partisan group of about 80 women in business, education and law, Scruggs told Billings that there are so many demands on state resources, and such uncertainty in revenues over the next two years, that removing the sales tax from food now is irresponsible.
"Taxes in Utah are high, compared to surrounding states, and they are unfair," countered Billings. Removing the food tax will force the Republican-controlled Legislature to deal with that basic unfairness. The Legislature, in restoring part of the federal tax deduction allowed on state income tax returns, has given a $100 million tax cut over two years, Billings said.
"A third of that tax cut went to the top 5 percent of wealthy Utahns. Half of that cut went to those who make $70,000 or more," said Billings. "You need money (to remove the sales tax from food), you need look no further than those tax cuts you gave."
Scruggs said it does no good to debate or argue past tax reductions. The Legislature gave them and certainly isn't in the mood to rescind them. "Hey, we asked for a relatively small $19 million tax cut (in September 1989). The Legislature gave a $35 million tax cut and would have done more if they'd known of the surpluses we're running today," Scruggs said.
Those surpluses - $50 million in the state's rainy-day fund, $50 million in fiscal 1990, which ended June 30, and a projected $50 million in the current year's budget - are "one-time" monies, Scruggs said. And only fools would allocate that money for an ongoing tax cut.
He then went on to detail the state's financial picture: $200 million in natural revenue growth over two years, only enough to pay for new school enrollments and inflation. But $400 million in "necessary and appropriate" requests for increased spending is suggested by state agencies, $80 million is at risk because of a federal employee lawsuit over back income taxes, $20 million is lost due to federal budget cutbacks and $20 million probably will be lost because of court decisions involving state-assessed properties.
"We're $300 million to $400 million in the hole, and I haven't mentioned removing the sales tax from food," Scruggs said.
"If we won't remove the food tax - and everyone says it is unfair - in times when we have at least a $150 million surplus, when will we remove it?" asked Billings. "The answer is, the Legislature won't. The citizens will have to do it - as they have in a number of other states."