Utah House and Senate leaders have agreed to a deal that will take more than $300 million in ongoing obligations and fund them with one-time money in next year’s budget. Because of a huge outcry from businesses and the general public, HB441 is “dead,” which is the massive bill that would have extended most services into the sales tax base, and lowered the sales tax rate. When a special task force reports back in August of this year, extending the state sales tax to services will be part of the overall “structure imbalance” fix. However, anything and everything will be looked at, including:

· Restoring the state portion of the sales tax on unprepared food.

· Property tax reform.

· Constitutional amendments allowing more income taxes to be used beyond public and higher education, or a flow between the sales tax and the income tax earmarks.

· A user tax in transportation ($600 million in sales tax currently goes into the Transportation Fund, which is supposed to be self-sufficient with the per-gallon gasoline tax.)

There is $75 million in ongoing surplus revenues put aside in tax cuts.  Perhaps in a special session after the task force reports in August, that tax relief can be solidified. GOP Governor Gary Herbert recommended a $200 million tax cut in December.  But when the $1.3 billion tax surplus dropped to $1.1 billion in February revenue updates, and with growing needs in education, Medicaid and other programs, that big tax cut started to dwindle. The new budget deal – with the new task force study – basically puts off the talked about May or June special session.  A fall special session may be called to take up these “big lifts” of reforming the state’s tax structure.  Or all this could even wait until the 2020 regular general session.