The Tax Restructuring and Equalization Task Force held a town hall meeting in Moab on Saturday, July 20, at the Grand Center in Moab. The town hall was the seventh of eight town halls around the state with the goal of gathering local input from potentially affected communities and using that input in developing a tax reform plan to present to state lawmakers.
The task force is composed of 10 voting members, including five state senators and five state representatives, as well as several non-voting members.
The meeting began with task force member introductions and a PowerPoint presentation which provided an overview of the impetus behind these efforts at tax reform. The town hall moderator, Pat Jones, stressed the importance of public comment in the tax reform process.
“That’s why we’re here today, to get your contributions on tax reform,” she said.
Comments may also be submitted on the website.
The presentation explains that Utah’s population is growing rapidly and is expected to nearly double over the next 40 years. This growth is affecting housing affordability and traffic congestion, as well as contributing to air quality challenges. It is also putting pressures on the education system, as well as on recreation areas and public safety agencies.
“To maintain our quality of life and keep up with the coming growth, we will need to responsibly manage investments in critical government services and infrastructure,” it states.
According to the presentation, tax revenue is growing, but income tax revenue is outpacing sales tax revenue. This is a problem because, under the current revenue structure, income tax can only be used for education while sales tax funds a variety of services such as Medicaid, public safety, social services, transportation, and both public and higher education.
Technological advances are affecting the gas tax which is dedicated to funding transportation. Yet with more fuel efficient vehicles, electric vehicles, and rising costs of transportation infrastructure, the gas tax is not keeping up with mobility needs.
Sales tax revenues are also being affected by technological advances that are causing the economy to shift, as sales tax-generating goods are being replaced by services, which do not generate sales tax. The presentation gives the example of how CDs and DVDs are being replaced by streaming services, and mobile phone apps are replacing a host of items such as cameras, radios, calculators and paper goods.
This means less sales tax will go into the general fund, which is where funding is drawn for many services such as Medicaid, transportation, education, public safety, recreation, support for children, disabled, and elderly, along with homelessness and affordable housing.
“The general fund pays for critical services for our families and neighbors, and makes it possible to fund our schools and roads,” the presentation states. “Our tax structure is outdated.”
The presentation also explains that in 2019 the Utah state legislature designated a task force to look for ways to address the tax structure, using public input to form suggested solutions to the legislature.
The process the task force is following to fulfill their mandate begins with public engagement and a listening tour, of which the Moab town hall was a part. The second step will be to make sure challenges are correctly identified and prioritized. The third is to explore and consider options (such as adjusting existing rates, modifying the tax base or reducing services and investments). Finally, they will make tax restructuring recommendations to the legislature.
During the public comment portion, the moderator asked the audience to raise their hands after each comment if they had similar sentiments to express, so the task force could gauge how many shared an opinion without duplicate comments.
Moab locals, as well as several persons who identified themselves as being from other cities and towns in the region, spoke during the public comment portion of the town hall. Many thanked the task force for their outreach efforts and for coming to Moab.
Grand County High School teacher and Grand Education Association President Hank Postma said he was at the town hall to stand for education.
“Nothing here does anything to fix us being the last in the nation for education funding,” Postma said, adding, “The current funding of education is not meeting the needs of our students.”
Postma also said, “We’ve been told for the last decade-plus to be patient and let the economy grow, and that growth will fund the needs of our students. Well, the economy has grown. And rather than taking the opportunity to invest in our children, we are looking at putting that money elsewhere.”
Grand County Council member Curtis Wells spoke on behalf of the county council regarding the need to reform the Transient Room Tax, which is charged to those who rent temporary lodging for stays of less than 30 consecutive days. He said that currently the county is mandated to spend at least 47 percent of proceeds on tourism advertising, which means that $1.9 million is budgeted for promotion now — about one-sixth of the county’s general fund.
“We’re a fifth-class county dealing with the infrastructure needs of a first-class county,” Wells said, adding that it is important to give counties “the flexibility to manage the experience and manage the infrastructure” to maintain the best aspects of being a world class destination.
Many hands went up following Wells’ remarks.
Several speakers expressed opposition to increasing sales tax, which they said could be a cost burden to both businesses and locals.
Moab City Council member Kalen Jones read a statement on behalf of the city council.
“Sales-based taxes make up 81.6 percent of our General Fund budget,” Jones said. “Visitors to our community pay the majority of those sales-based taxes, and we are dependent on those taxes to provide services to a transient population of almost two million. Changes to that tax structure would mean that visitors would pay less and the cost of those services would shift primarily to our 5,300 citizens.”
This concern was shared by others who gave public comment.
The power point presentation on tax reform and a video recording of the Moab town hall meeting are available on the website strongerfutures.utah.gov. Public comment may also be submitted via the website.