A .005-cent increase in state sales taxes for transportation projects is part of a new, last-minute omnibus tax bill that's being labeled a "tax shift" by legislative leaders because it includes several tax breaks, including $18.7 million to help Utahns who buy their own health insurance.
But HB359, expected to be considered by the House before the 2008 Legislature ends at midnight tonight, does not include a $5.7 million property tax break aimed at Delta Air Lines that will impact Salt Lake County rather than the state.
The property tax break is part of SB237, a bill that changes the way airlines are taxed to encourage Delta Air Lines to keep its Salt Lake City International Airport hub.
The sponsor of SB237, Sen. Wayne Niederhauser, R-Sandy, said the current tax structure is actually an incentive for airlines to leave the state. He acknowledged, though, that the changes would hurt county tax collections.
"Yes, it's painful, but we think it's something that needs to be done," Niederhauser said, noting that another provision of the bill will give the city a $1.5 million sales tax break in 2010, when work is set to start on a new airport construction project.
The bill has not gone unnoticed by the county. At last week's Salt Lake County Council meeting, Salt Lake County Councilman David Wilde grumbled, "This is for the benefit of all Utah residents on the backs of Salt Lake County taxpayers."
The focus on Capitol Hill, however, has been on the so-called "tax shift" that's now being packaged into a single bill sponsored by Rep. John Dougall, R-American Fork. The bill passed the Senate 24-3 with no debate. In addition to the tax break for self-insured Utahns, it will also include a $2.8 million set of fixes such as a nearly $2 million settlement for railroads on a tax issue and up a $2,500 tax credit for Utahns who install solar energy devices.
The sales-tax hike only surfaced last week as a way to pay for "choke-point" transportation projects around the state in a year when revenue growth projections fell far short of expectations.
The .05 percent increase would boost the state's share of sales taxes from 4.465 percent to 4.470 percent. It would amount to an extra 5 cents on every $100 purchase but would not be applied to food. The total amount raised would be $21.8 million.
House Speaker Greg Curtis, R-Sandy, says that some members of the GOP caucus "are getting a little anxious" about increasing the state sales tax.
The state has around $775 million in tax surpluses this year and 2008 is an election year for all 75 House members. So justifying any tax hike may be challenging when conservative legislators face their constituents.
But Curtis said his GOP caucus approved the tax hike with 42 or 44 votes in a caucus meeting last week. Thirty-eight votes are needed for a bill or appropriation pass in the House, and Curtis said he still believes he has the votes for the tax hike or as some Republicans are calling it, a "small tax shift."
Senate Majority Leader Curt Bramble, R-Provo, said he's not hearing the same concerns from GOP senators over what he called a compromise tax package. Especially, he said, since the amount of the sales tax increase is the same as the sales tax decrease that took effect Jan. 1."Being successful with a bill like this requires compromise," Bramble said. "Sometimes you just have to hold your nose and vote for the compromise."