A bill eliminating Utah food tax ‘contingent’ on changes to education funding

SALT LAKE CITY — Utah lawmakers have announced a plan to eliminate the state portion of sales tax on food. 

But, under a new pair of bills it would only come off if Utah voters approve amending the state Constitution that requires income tax fund public education, higher education, children and people with disabilities. 

#BREAKING @utahhousereps says they will get rid of the sales tax on food IF voters approve freeing up Utah’s income tax from being required to go to education/social services.

Lawmakers argue the flexibility isn’t there to remove sales tax on food w/o this. pic.twitter.com/wP5UBLR0Jd

— Lindsay Aerts (@LindsayOnAir) February 17, 2023

 

Specifically, H.B. 101 First Sub, Food Sales Tax Amendments outlines that the state portion of the food sales tax would come off, but only once voters approve the change to the income tax fund, as outlined in SJR10.  That question to amend Utah’s Constitution would be posed to voters on the ballot in November of 2024.

Lawmakers say passing this bill, and the subsequent passage of the amendment, means $200 million dollars in revenue would come out of Utah’s state sales tax and needs to be made up in some other way.  That’s why they are pushing for “flexibility” with the income tax fund. 

“Sales tax on food helps to fund all state needs,” said Sen. Ann Milner, R-Ogden, which would include things like Medicaid, homeless programs, water, public safety, courts, parks, and other state needs.

“We have no other choice,” she said.

Talks with education groups

Lawmakers have been in discussions with education groups in an effort to get them on board. They each hope to get their wish list. Lawmakers want to free up the income tax fund and education groups want more funding for education that’s long term and stable.

Lawmakers say the income tax fund has grown at “10 times the rate” of the General Fund (where sales tax goes) and so having access to that money, they argue, will help balance out some of the state’s other needs.  

The two sides had yet to strike a deal Friday but with only two weeks left in the legislative session, lawmakers said they needed to release their plan.

Education community objections

Sen. Kathleene Riebe, D- Salt Lake City, told reporters Friday education groups feel like this plan is a “bait and switch.”

“They are not going to support this,” Reibe said. “I think some of the things they’ve asked for is a floor — at how low we can go [in funding] and a cap, and so we’d like to see us not be at the bottom of the [Weighted Pupil Unit] level,” she said. 

“A lot of them just feel a little unsteady about this.”

She added that they would also like to see a longer trend of stability in education funding. Reibe argues that having the earmark on the income tax gives them that.

The legislature has started to create what they see as the start of more stability. A recent bill puts some education funding in the base budget, meaning it’s required to be funded every year. There have also been asks from appropriations that the money include accounting for inflation, increasing the WPU by 6%, money for equalization, money for at risk students, and all-day kindergarten.

But Reibe argues that those laws could be subject to change, not guaranteed in the constitution like the funding is now. 

“It seems very unsteady and a little unknown,” she said.

Milner said some of her conversations with education stakeholders has been to see if they’d be on board with establishing a framework enshrined in Utah’s Constitution. 

“…that says, we’re going to establish a funding framework and a Stabilization Fund.”

Reibe said if that were to happen, it could ease a lot of these fears.  

 “I think that is something that has been explored or could be explored.”

The bill is sponsored by Rep. Judy Rohner, R-West Valley City. It is scheduled to be heard by the House Revenue and Taxation Committee on Feb. 21.

Related reading from the 2023 Uta Legislative Session:

• Calls to remove sales tax on food, lawmakers say it’s complicated
• Bill introduced to remove state-imposed food sales tax
• Utah Senate passes a tax cut for Utahns, Gov. Cox says he will sign it
• States target transgender health care in first bills of 2023
• Utah lawmakers propose reducing the flat income tax rate by .20%