Robert Gehrke
February 24, 2010

Gov. Gary Herbert remains opposed to a tax increase — including the tobacco tax that has widespread popular support — and believes Utah’s budget can be balanced and critical cuts averted without the additional revenue.

The governor has not said that he would veto the tobacco tax should it reach his desk, but it remains an option.

“The governor has been opposed to a tax increase of any kind this session and he remains opposed to a tax increase on tobacco or anything else,” said his spokeswoman, Angie Welling. “A veto on those bills remains a possibility, but he has not said with certainty that that’s what he’ll do.”

Welling said the governor remains convinced that the 2011 budget can be balanced while protecting public and higher education and without making the deep cuts that legislators are considering — things like the early release of 215 prison inmates and laying off of 29 highway patrol troopers.

“He simply does not think this is the right time for a tax increase at all,” Welling said. “He thinks he has provided a way to balance the budget without this funding.”

The Salt Lake Chamber of Commerce on Wednesday reiterated its call for legislators to raise the cigarette tax to at least the national average.

“Increasing the tobacco tax has overwhelming support from both the public and the business community because it has nothing but upside,” said Randy Shumway, president of the Cicero Group and a member of the chamber’s board of governors.

The organization also would like to see lawmakers use more of the Rainy Day Fund, essentially the state’s savings account, to protect education and to pay for the 11,000 public school students expected to enroll next year — an $80 million commitment that neither the Legislature nor governor are proposing.

“By combining the additional money from the Rainy Day Fund with the revenue from an increase in tobacco tax, we can avoid cuts to public and higher education,” said Lane Beattie, president of the Salt Lake Chamber of Commerce. “There is enough money to make sure education is taken care of.”

Senate Majority Whip Wayne Niederhauser, R-Sandy, said senators seem content to make the cuts needed to balance the budget without a tax increase, particularly the cigarette tax, which relies on a product that has seen declining sales.

“It seems we can build a budget without it, and if we could, it would probably be good,” he said.

Legislative leaders’ initial budget blueprint released Tuesday didn’t include any new taxes, but made some stark cuts that may prove to be untenable.

Herbert has proposed other “revenue enhancements” that he does not consider taxes — including requiring companies to file quarterly payments and eliminating a tax break to large retailers for collecting sales tax for the state. Together they would generate $110 million and $24 million, respectively.

He has also proposed delaying some road projects or bonding for the projects, which could free up $100 million.

“There are ways to ensure public and higher education are held at current funding levels and critical services are maintained and he’s continuing to encourage the legislators to look at those options,” Welling said.

The chamber opposes repealing the discount for retailers, arguing it would essentially be a tax increase and would cost jobs in a time businesses can’t afford it.