SALT LAKE CITY — Putting a state tax at least some services while reducing the rate Utahns pay on either purchases or earnings are on the Republican supermajority's agenda for the 2019 Legislature following all-day caucuses Tuesday.
No specifics came out of the separate House and Senate GOP closed-door caucuses, including about possible changes to voter-approved ballot initiatives expanding Medicaid coverage and creating an independent redistricting commission.
Taxes are top of mind for lawmakers as they prepare for the 45-day legislative session that starts Jan. 28.
They have a $1.3 billion budget surplus and a recommendation from GOP Gov. Gary Herbert to give Utahns a $200 million sales tax cut and a drop in the state sales tax rate from 4.7 percent to below 3.9 percent.
"We talked in broad principles," incoming House Speaker Brad Wilson, R-Kaysville, told the Deseret News. "We will seriously look at attempting to broaden the base and lowering the rate somewhat, the sales tax piece."
That action would be revenue neutral, he said, meaning the amount of the rate decrease would be determined by what services are selected to be subject to the sales tax.
The governor has used limousine rides as an example of services to tax, but the estimated $800 million price tag for his proposed rate cut would require a long list that likely would extend beyond luxuries.
Wilson said House Republicans need to talk more about whether to go that far — or maybe even further. He said taxing every service purchase would provide funding to lower the rate to 2 percent, so there's "a menu of options."
Then there's a tax cut.
The question for the GOP appears to be not whether to slice taxes, but which tax and by how much. Some, including House Revenue and Taxation Committee Vice Chairman Tim Quinn, R-Heber, have already said it should be income, not sales tax.
"Overall, we would also like to do a tax cut. How much and which tax is yet to be determined," Wilson said. "We absolutely have all the options on the table at this point. There's no specific proposal."
Incoming Senate Majority Leader Evan Vickers, R-Cedar City, said a group made up of Republican House and Senate members as well as representatives of the governor's office are already working to come up with a bill.
"It's one of those discussions that may take some time. It may not be something we solve this session. Maybe there are pieces we can solve. But it's a pretty big lift," Vickers said. "We'll do our best."
He said agreeing that the shrinking sales tax base needs to be broadened is the easy part, while coming up with a list of services to start taxing is going to be much more difficult.
Both the House and Senate Republican talked about the Medicaid expansion initiative passed by voters in November.
Wilson said the House discussion was more focused on explaining the federal program to new members, who missed the legislative battles led by former House Speaker Greg Hughes, R-Draper, that led to voter action.
"I think what we see is a recognition that voters have spoken on this issue and we need to work in that environment," Wilson said, to implement the expansion "but not create financial risk for the state."
He said the 0.15 percent sales tax increase to help pay for extending federal health care to low-income Utahns, including those who fall into a coverage gap under the Affordable Care Act, will likely stay.
"I think that remains in place and will be used to pay for coverage for everyone," Wilson said of the $91 million sales tax increase expected to bring $800 million in federal funds to the state.
Vickers also said there's no talk of tampering with the sales tax increase approved as part of the initiative. But there are concerns, he said, about estimates that show that increase might not be enough to cover the state's share of the expansion.
"We have to be a little careful," Vickers said. "The public wants expansion and they want a tax to help cover that. Our job is to see how far we can carry that."8 comments on this story
The "Better Boundaries" initiative that establishes an independent commission to recommend a plan for adjusting congressional, legislative and state school board districts after the once-a-decade census, was not discussed in either caucus.
There has been some Republican opposition to the initiative, with outgoing Senate Majority Leader Ralph Okerlund, R-Monroe, labeling it "a cleverly disguised partisan plan" intended to favor Democrats.
Proponents of the initiative have said they expect a challenge. Because the next redistricting effort won't get underway until after the 2020 Census results are completed, lawmakers could wait to deal with the issue.