As one of the reddest states in the nation with a Republican dominated legislature, one would expect fiscal restraint and conservative legislation proposed during Utah’s 2015 legislative session.
Such is not the case.
Instead, even with a $700 million state budget surplus, the 2015 Utah Legislature is discussing nearly a dozen major tax increases. Your Taxpayers Association has been working tirelessly the past month to keep the legislature from increasing your tax burden.
But beyond egregious tax hikes and poor tax policies being considered, there are several excellent pieces of legislation that will improve the tax climate for individuals and businesses in the state.
Your Utah Taxpayers Association supports taxpayer friendly bills as they move through the legislature and fights tax hikes and poor tax policies. Below are some of the 2015 Legislature’s best and worst bills for Utah taxpayers.
2nd Sub HB 190 – Representative Curt Webb
HB 190, “Assessment Area Act Modifications,” is the result of several years of work on Rep. Webb’s part and a summer of negotiations with various stakeholders. While imperfect, HB 190 institutes important protections for taxpayers throughout the creation and implementation of assessment areas.
Assessment areas are used to assess fees on the property owners that directly benefit from an improvement or service. For example, sidewalks are generally funded through an assessment area rather than through general city taxes. If used properly, assessment areas can be a great way of keeping costs concentrated on those who benefit. However, if used improperly, assessment areas represent yet another layer of taxation on property owners.
HB 190 enhances notice and hearing requirements, reduces the citizen protest threshold and allows more time for protest, and tightens up the procedural front end of assessment areas so that taxpayers are protected.
1st Sub SB 182 – Senator Curt Bramble
SB 182, “Amendments to Sales and Use Tax Exemptions,” creates a sales tax exemption for highly specialized manufacturing equipment with an economic life of less than 3 years.
The Utah Taxpayers Association has long believed that business inputs should not be subject to sales tax. SB 182 is another step towards the complete removal of double taxation in manufacturing processes.
SB 267 – Senator Stuart Adams
SB 267, “Sales and Use Tax Exemption Amendments,” removes the existing 3-year economic life provision to expand the manufacturers sales tax exemption on business inputs to all consumable goods.
This is an issue of state competitiveness for high-paying jobs and capital investment. Of the 46 states with a sales tax, 40 of them have an exemption for manufacturing equipment, and of those 40, Utah is the only state with the unique 3-year-economic-life requirement. This requirement favors long-lasting equipment over equipment that is used in more intensive manufacturing processes.
If exempt from sales tax on business inputs, manufacturers will be able to take that money and re-invest it, leading to more jobs and economic growth.
When it comes to economic growth, tax policy matters. Utah’s tax policy significantly affects the long-term decisions that businesses make. If Utah wants to create jobs, capital accumulation, investment, and productivity need to be protected. SB 267 does this, and will more than pay for itself over the years as Utah becomes an even more attractive place for business.
HB 251 – Representative Johnny Anderson
HB 251, “Amendments to the Interlocal Act,” requires interlocal entities follow the same fiscal procedures required of other entities. Although not vested with direct taxing authority, interlocal entities do assess fees on other governmental taxing entities and use revenue bonds to fund specific projects. Placing fiscal procedures on interlocal entities will enhance transparency and accountability.
3rd Sub SB 97 – Senator Aaron Osmond
SB 97, “Property Tax Equalization Amendments,” is a $75 million statewide property tax increase. This legislation attempts to raise the minimum statewide basic levy (a property tax for education funding imposed statewide) by $75 million. This would be a roughly $50 increase on the average homeowner in Utah, and much higher for businesses.
Your Taxpayers Association has long felt that greater funding equity between school districts is needed. Some school districts with a wealthy tax base enjoy funding per student that is as much as four times higher than in other school districts. This is a problem created by the legislature through past district boundary drawing and should be fixed legislatively. But a $75 million property tax increase is not the way to address this problem.
The Utah Taxpayers Association has proposed instead allocating new growth in the education fund towards school district property tax equalization. In a year of surplus, the legislature should not consider such a large property tax increase.
Unfortunately, SB 97 has already passed out of the Senate and has been heard and passed in House committee. The bill is now waiting on a final vote on the House floor. Your Taxpayers Association has been educating and lobbying the state legislature to vote no on SB 97 and refrain from raising your property taxes.
HB 327 – Representative Johnny Anderson
HB 327, “Personal Property Tax Amendments,” is not a new tax increase, but a tax shift from businesses onto homeowners. HB 327 would exempt any item less than $1,000 from being assessed business personal property tax. The legislative fiscal analyst estimates that removing this source of revenue would result in an $11.7 million tax shift onto homeowners.
Your Taxpayers Association is sensitive to the problem of nuisance business personal property tax audits on small businesses, but shifting the tax liability onto homeowners is not the way to solve this problem.
HB 358 – Representative Joel Briscoe
HB 358, “Voted and Board Levy Amendments,” increases the maximum rate allowed in the voted local levy to .002. This raises the property tax cap available to local school districts by roughly $50 million. Your Utah Taxpayers Association expects that if HB 358 were to pass, most of Utah’s school districts would propose to raise their voted local levy to the maximum rate.
Prior to the implementation of Utah’s Truth-in-Taxation law, entities were allowed to increase their property tax rate by 6% per year. Intended to be a ceiling, this 6% cap instead became the floor, and entities raised taxes by 6% per year regardless of whether or not a property tax increase was necessary.
HB 358 would raise the voted local levy ceiling by nearly $50 million to be borne by property owners in Utah.