Wednesday, February 21, 2007

Will the Legislature Get the Tax Cut Done?

Our whole system of government is founded on the principle of compromise. Of course, that’s not the sole principle involved, but it's among the most significant. It chapped my hide last year when our legislature failed to achieve compromise on how to give taxpayers back a paltry 7% of the largest budget surplus in state history (see here).

The legislature did finally come back for a special session in the wake of impending elections to achieve compromise on this issue. Are we in for a repeat of last year at a higher level?

This year we have a much larger budget surplus than we did last year. Going into the legislative session, most legislators agreed that there should be a tax cut, but the House and Senate disagreed broadly about the amount and nature of the cut. It seems that leadership of both bodies has achieved general agreement on the amount, which I calculate to be about 14-15% of the astounding surplus. But there is still disagreement on how to do the cut.

It was widely reported last year that the whole problem of being unable to resolve the tax cut issue boiled down to a battle of egos rather than concern over what was best for the citizens of Utah. Certain leaders came into this session contritely admitting that mistakes had been made and touting a resolve to do better this year.

Maybe they are doing better. And maybe not. One of the chief bones of contention has been the proposed elimination of sales tax on unprepared food. The House is all for it and the Senate is completely opposed to it. According to this D-News article, it seems that some progress has been made toward compromise on this issue. But it’s too early to tell if it will really work out. And this is only one issue. Senate President John Valentine (R-Orem) says that they are going to have to work around the clock to resolve the tax cut issue.

I expressed dismay last year that resolving the tax cut was left to the very end of the session. I felt that it should have been priority #1. Other matters could then be considered after that was resolved. I mean, if you can’t cut taxes when the economy is booming and we have a stunning surplus, when can you cut taxes?

But that’s not how the legislative session works. Tax cuts are among a number of squishy issues that tend to be shaped by how other legislation turns out. That is why the D-News article says that Valentine “described the tax cuts as being on a "parallel track" with budget issues.” The issue only gets firmed up as various budget issues get nailed down. I may not like it much, but that’s the way it works in reality.

So it looks like we’re going to just have to sit tight and see how our legislators handle this matter as the session draws to a close. I only hope that this year they put the ultimate goal ahead of ego and show us that they can actually achieve a useful compromise without having to spend more of our money in a special session to do it.

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