Gov. Norm Bangerter's plan to return $80 million to the state's income tax payers drew criticism Wednesday from social service agencies, qualified support from his Democratic opponent and little enthusiasm from lawmakers.
The mixed response comes one day after the governor announced plans to refund $80 million to taxpayers, save $20 million for a "rainy-day" fund and put $10 million into education programs.The Human Services Coalition of Utah signed a letter asking the governor to spend $15 million of the state surplus to fund - or restore - health and social serviceprograms before any refund is made to taxpayers.
"The surplus . . . is not only a matter of mistaken budget projections, but also of cutting, limiting and eliminating human-services programs," Bill Walsh, Utah Issues director, said during a press conference Wednesday. "It is our contention that the surplus was, in large part, generated by limits to these programs."
The coalition, comprised of about 25 human service agencies, has targeted several areas where a portion of the $110 million surplus should be used. The coalition wants emphasis placed on programs to help people work, services that support troubled families and restoration of health programs to meet critical needs.
Bangerter's Democratic rival in the governor's race, Ted Wilson, said he would have handled the surplus in much the same way as the governor.
"In fact, it looks as if he followed my plan," Wilson said. "I'm not accusing him of doing that, but for two months I have said in every speech and every press interview that we need to return that part of the surplus that came from miscalculations, but keep that part that came from natural growth," he said.
But Wilson said the governor's proposal to reduce the state income tax rate by 5 percent and allow residents to deduct one-third of their federal taxes is "a river-boat gamble."
Wilson suggested that it would be better to wait until the regular legislative session next January to deal with tax cuts and the restoration of federal tax deductibility.
Democratic legislators, however, are sternly set against the July special session called by the governor. And even many Republicans lawmakers don't like it much.
"I'd prefer not to have a special session," said Senate Majority Leader Cary Peterson, R-Nephi. Peterson believes that the surplus income tax collections should be returned. But a special session worries him.
Even though Bangerter and House and Senate GOP leaders agreed several months ago, when it became apparent that the state was going to have a $100-million-plus revenue surplus this fiscal year, that no special session would be called before they had a firm plan of action, Bangerter has announced the session without a consensus among House and Senate Republicans.
"If we can't get together with the House on what is to be done. Well, it will be tragic," Peterson said.
Rep. Craig Moody, R-Sandy, who is also the state GOP chairman, said he thinks Republicans can come together. "We all want the money returned. But we don't agree on the mechanics of doing that."
The main area of concern expressed by those interviewed Wednesday during legislative interim committee meetings is with Bangerter's proposal to return the $80 million surplus via cash rebates mailed out 30 days after the session. Bangerter wants to keep $20 million in extra sales tax for emergencies and spend an extra $10 million on school textbooks and equipment.
The Democrats really hate the idea of a cash rebate, saying it is a desperate attempt by Bangerter to win votes this election year. Bangerter trails Wilson by 20 points in public-opinion polls.
But a number of Republicans also don't like the rebate idea. Peterson, Moody and House Majority Leader Nolan Karras, R-Roy, all said they prefer a credit on the 1988 income tax returns instead of a cash rebate.
"I'm sure his (Bangerter's) aim in the rebate is political. But he won't get much out of that," said Senate Minority Leader Rex Black, D-Salt Lake.
"I don't think a cash rebate helps you much politically. People are skeptical about it," said Karras.
One of Bangerter's strengths, however, is getting the Republican-dominated Legislature to go along with his ideas, and his success in the special session will hinge on his continued influence with GOP lawmakers.
Utah retailers want that cash rebate as a means of jump-starting Utah's economy. Bangerter believes they have a good argument, and Moody admitted that the rebate plan may well win over Republican House members.
Wilson, partly because of the give-a-check-so-they-can-spend-it theory, said he doesn't oppose a cash rebate. But he does have concerns about how Bangerter plans to permanently lower taxes.
Legislative Analyst Leo Memmott said Wednesday that he estimates an ongoing surplus of $92 million next fiscal year, which starts July 1. Memmott says $15 million extra will come in increased sales tax, $68 million in income tax and $6 million in corporate income tax.
So something must be done about some of those revenue collections or the state will have an ongoing surplus. Bangerter wants to give back the extra $68 million in income tax by lower rates and restoring to state returns a third of the deduction for federal taxes paid.
However, the governor doesn't propose doing anything with the extra, or natural growth, in the sales or other taxes.
Wilson, who has promised no tax increases if elected governor, said he may have to change that promise if Bangerter and GOP lawmakers mess up next year's revenue picture.
Said Wilson, "I've said all along that we should return the extra money in the income tax, but we should keep natural growth. I'm glad to see the governor has come around by my thinking." Wilson doesn't think the income tax should be changed in a two-day special session. "It is too complicated, and we don't even know for sure what the income tax has brought in this year or have a good estimate on what it will bring in next year. You shouldn't make such important decisions on inadequate data."
Bangerter's people say there is adequate data and that if a special session isn't called a law already on the books to return the surplus via tax credits and rate reductions will unfairly handle the problem.