When it comes to Utah’s legislature, much of the attention focuses on the general session which takes place in January through March each year. While this time is critical to passing the state budget and many other important laws, monthly interim sessions are where the preparation happens and the work gets done before the general session even begins. Each committee studies various issues, including legislation that did not pass in the last general session, and approves bills to be considered during the upcoming general session. For more information regarding the specifics of an interim session, check out this blog post.
This month, the Salt Lake Chamber’s policy staff attended interim committee meetings to keep business leaders up to date on issues pertinent to them. Here is the rundown:
Economic Development and Workforce Services
The first half of this committee focused on economic development incentives administered by the Governor’s Office of Economic Development (GOED). The Economic Development Tax Increment Financing (EDTIF) program began in 2005 and was developed to make Utah competitive, to help woo companies to Utah and encourage business expansion within the state. The EDTIF focuses on economic growth drivers like job creation and wages and is a post-performance tax credit, meaning the companies don’t receive the credit until a certain contract year (contracts have shortened to 7 years) when they can prove they have met their economic growth goals. This post-performance aspect is unique compared to other state’s incentives. Since the EDTIF began, it has generated over $264 million in revenue for the state. Currently two thirds of contracts are with existing Utah companies. GOED shared that since 2005, EDTIF participants have increased new incremental jobs by 19,370. Overall, EDTIF companies have diversified the statewide economy, created high-paying jobs, and strengthened the supply chain. A company can quality for an EDTIF by incentivizing 50+ jobs at 110% of the average wage in their particular county. Lawmakers raised questions about the drawbacks of these tax incentives for smaller companies in rural areas of the state, and also if the jobs and wages companies are high-quality. The committee also discussed how to increase accountability and build in mechanisms to the EDTIF to address some of the issues. This may be an indicator that changes to the EDTIF will occur during the upcoming general session.
The committee also discussed the earned income tax credit. This was a bill the Salt Lake Chamber supported in the 2018 general session and although it passed in the House and Senate, was not funded. The bill sponsor, Rep. Westwood, explained that they have refined the parameters of the tax credit and took the fiscal note down to $6 million. It targets a very specific group of Utah’s working poor and helps to break the cycle of intergenerational poverty. The committee voted to make it a committee bill and will have language drafted by the October interim meeting, putting the legislation on track to be considered during the 2019 general session.
Revenue and Taxation
In response to the recent United States Supreme Court decision in South Dakota v. Wayfair, the Legislature passed a bill during last month’s special session that defined when remote sellers must collect and remit sales tax on transactions made in Utah. The committee discussed the projected fiscal impacts of this change and how it may potentially impact other areas of Utah’s tax code. The committee also discussed and received an update on several different pieces of draft legislation to look at during the interim meetings that would amend Utah’s income tax code to address issues created by the recent federal tax reform. One of these draft legislations was presented by Representative Hawkes and would modify the property tax valuation and appeals processes for county assessed real property. The committee will more fully look into this draft legislation during future meetings.
*These are just a few of many meetings on the Hill last week. Visit le.utah.gov for a full listing and audio of all interim committees, or check back here next month for more interim updates. As always, reach out to our public policy team with specific questions or ideas. We are willing to help answer questions and share the Chamber’s policy positions on topics