Lawmakers tell a good story about "holding the line" on tax increases. But when the dust finally cleared from the 1991 legislative session, most Utahns once again found themselves looking at higher taxes.
Most Utahns will see higher taxes on automobiles, and many others will see increases in taxes on homes and businesses. Lawmakers also raised the driver's license fee, raised the tax on cigarettes and allowed local governments to raise the tax on restaurants and lodging."Very definitely, it was a session where nobody wanted to raise taxes for any reason," explained Rep. John Valentine, R-Orem, and vice-chairman of the House Revenue and Taxation Committee.
But the only serious tax increase lawmakers actually voted down was a 2-cent tax on each video rental, the proceeds of which would have gone to fund arts education in public schools.
"It got caught up in a committee that didn't want to raise taxes for any reason," said Rep. Dan Price, R-Vernal, the sponsor of the bill.
Lawmakers twice voted down an increase in the driver's license fee, then passed a non-controversial bill that had been quietly amended to include the increase. Gov. Norm Bangerter wanted the fee increase, ostensibly to provide about $160,000 a year toward reducing the length of the lines at driver's license centers and provide better service.
They also raised the tax on a pack of cigarettes by 3.5 cents a pack - a tax increase that proponents say will raise $2.8 million in the first full year it is implemented. The money will be used to fund substance-abuse treatment programs for teenagers who currently cannot get treatment because state programs are underfunded.
Most Utahns will also see some sort of increase in their property taxes on cars, homes and businesses. That comes courtesy of the Utah Supreme Court, which ruled the state had unfairly taxed AMAX Magnesium. That ruling threw into question $56 million in annual property taxes paid by companies like AMAX.
In what was unquestionably the most complicated issue facing the Utah Legislature this year, lawmakers revamped the state's property-tax law to recoup $45 million of that. But the remaining $11 million had to be recovered through slight increases on the property tax on homes, businesses and cars.
"We tried to level the property-tax burden among all taxpayers," explained Valentine, a tax attorney who orchestrated the settlement. "We brought one group of taxpayers down and brought the other groups up."
There is a silver lining, said Bud Scruggs, chief of staff to governor Norm Bangerter. "If it had not been settled, it could have resulted in a massive shift of property taxes to homeowners," he said.
At issue is what is known as "centrally assessed" properties - properties that under state law are taxed by the State Tax Commission rather than local county assessors. Under the old law, counties offered a 20 percent property-tax exemption that the state did not. The Supreme Court ruled that was unconstitutional.
Those benefiting from the ruling are all mining companies like AMAX and Kennecott, transportation companies like Delta Airlines and Union Pacific Railroad, utilities like Utah Power & Light and all businesses that straddle a county boundary. Those kinds of companies will all see lower property taxes; utilities alone will see a 7.4 percent decline in property taxes.
To compensate, Utahns on average will see a 1 percent property-tax increase on homes, a 2.4 percent increase on their autos and a 3.1 percent increase on their local businesses.
To avoid those increases, some lawmakers had wanted to impose higher taxes on centrally assessed businesses, including higher severance taxes on oil, gas, gold, silver and copper. But those lawmakers were in a minority.
Most organizations from the Utah Taxpayers Association to the Chamber of Commerce praised the settlement as a fair compromise.
In other tax issues, lawmakers also redefined above-ground vs. underground oil and gas and how it is taxed - a bill that will result in $2 million more revenue to the state from oil and gas companies.
They also passed a bill that allows counties to impose a 1 percent increase in the sales tax to fund tourism promotion and allows Salt Lake County to increase the lodging tax by .5 percent to fund Salt Palace maintenance.
Also introduced, but not considered, were two different packages of bills that would have reformed the state's income-tax laws. Democrats had wanted to readjust tax rates and index them for inflation, while Valentine had proposed different versions of a flat-rate income tax that would have eliminated most exemptions and deductions and imposed the same rate on all taxpayers.
"We're disappointed we didn't get a hearing," said House Minority Whip Kelly Atkinson. "But we'll be back next year."
"There's always next year," agreed Valentine.
On tax-related issues, the Legislature
Didsend to the governor bills that would:
- Increase restaurant sales tax by 1 percent.
- Increase lodging taxes by 1/2 percent.
- Increase residential property taxes by an average 1 percent.
- Increase auto property taxes by an average 2.4 percent.
- Increase local business property taxes by an average 3.1 percent.
- Increase the cigarette tax by 3.5 cents per pack.
- Increase driver's license fees by $5 - and extend the license period from four to five years.
Did not :
- Impose a 2-cent tax on each video rental.
- Reform state income taxes.
- Pass a flat-rate income tax.
- Raise severance taxes on gold, silver, copper and coal.
Who will pick up the tab?
Because of a state Supreme Court ruling that mining companies and statewide business paid too hight a property-tax rate, the Legislature had to shift some taxes.
Salt Lake County $76,430 +$12
Utah County 66,335 -1
Davis County 74,267 +7
Statewide Average 68,588 +7
Salt Lake County 3,197 -$4
Utah County 3,049 +6
Davis County 4,083 +1
Statewide Average 3,058 +1
Salt Lake County $522,327 +261
Utah County 418,822 -37
Davis County 471,996 -268
Statewide Average 409,763 +105
*Total of real estate, equipment and vehicles