What To Watch During Upcoming Legislative Session: Tax Reform, Housing, Water Banking

Jan 23, 2020

Monday is the first day of the Utah State Legislative Session, and while the voting chimes haven’t started ringing at the capitol quite yet, preparations are in full swing for the whirlwind 45-days of lawmaking. 

In fact, Republican Senator Lyle Hillyard of Cache County said he feels like the 2019 session never really ended for him. 

“I've been working all summer long on this tax reform issue," he said, "been very happy with the going out and having town hall meetings.” 

The town halls Hillyard is referring to preceded a special legislative session in December where lawmakers voted largely along party lines to approve a tax reform bill. 

While the bill reduced taxes in some areas with measures such as increasing dependent exemptions for Utah families, providing grocery tax credits for low-income individuals and significantly reducing or eliminating income tax on social security income, it also increased the sales tax on unprepared food and removed the sales tax exemption from motor fuel. 

Many Utahns worry these changes would increase the financial burdens of poorer individuals, while the state’s more affluent residents would benefit disproportionately. 

Signatures for a voter referendum on the bill were due earlier this week, and county clerks have until February 4 to verify them. 

As of Wednesday morning, just over half of the needed signatures had been officially verified. If the referendum passes, the legislature cannot implement the bill until after voters weigh in on the matter during the upcoming election. Republican House Representative Dan Johnson of Logan said the issue is going to require some thoughtful consideration over the next few months.

“I really think there's a big picture to it, and the process is not done,” Johnson said.

Hillyard said one of the next steps he would like to take with tax reform is re-evaluating sales tax exemptions. Although this action would be independant of the legislation the referendum could impact, Hillyard said it doesn’t make sense to work on any part of tax reform if the issue makes it to the 2020 ballot. 

According to Representative Val Potter, another Republican lawmaker from Cache County, if the referendum goes to the ballot, many of the state’s budgets that come from the general fund will be on hold. This includes services such as air quality and transportation.

Another high-profile issue for the upcoming legislative session will likely be housing affordability. Johnson said even though the economy is doing well, people are still struggling to afford housing.

“Income, people having jobs, is going at one trajectory, but the cost of housing is at a very, very high trajectory," Johnson said. "And it's wide — that gap is widening. And so there you have a good and terrible thing.”

Potter is also Chair of the Housing Affordability Commission. He said the cost of housing in Utah is one of the highest in the nation. That’s where the Housing Affordability Commission comes in. Potter said a proposed bill to appropriate $35 million aims to help fill that gap — if the money from the general fund is approved.

“We're coming up with some — not solutions — but some steps in the right direction to help those that are in need of housing that have jobs that are working towards either owning their own house and this will help them get there," Potter said, "or are renting that will help them to save so they can own their own house.”

While housing affordability does impact the entire state, other issues may be more on the forefront in rural areas. Cache County Republican representative, Casey Snider, said upcoming legislation related to land and water use will be important to watch. 

One example?

Water banking.

“In the long run, that's going to provide this valley and especially our agricultural industry with additional options that they didn't have before,” Snider said.

Water banking would allow individuals with water rights to use less than their allotted shares, without the risk of losing access to that water in the future. The excess water could then be used by people who had an immediate need for it.

Snider said he sees actions like this as a way to defer the need for expensive pipeline projects in the state. 

“It's going to be a net benefit for everyone," Snider said, "it’s going to be a bit of a net benefit for the environment, it's going to be a benefit to our communities, because we'll be able to use existing water a little more efficiently. And it's going to be a benefit to agriculture.” 

With this legislation, Snider said it is important to him to make sure water users are able to choose whether or not they participate in water banking and that they receive compensation for the water they do not use.