Tuesday, February 20, 2007

Sales Tax on Food Negotiations Prove Successful

First of all, thanks to all who communicated the League of Cities and Towns concerns to legislators with regard to HB 282, Sales and Use Taxation of Food and Food Ingredients. Needless to say, the debate over boutique taxes and uniform sales tax on food and its impact on local revenues and finances have been intense on Capitol Hill. Our grassroots efforts in opposition both last year and this session have made a significant impact with legislative leadership in their policy approach. As discussed at Monday’s LPC meeting, we have negotiated with House and Senate leadership to have revenue losses in affected cities offset by a 0.1% increase in the resort tax and a 0.05% increase in local option transportation taxes. While these numbers may look small on there own, in many circumstances they represent a 10%-30% increase in the sales tax rate that is being imposed to offset the 10%-30% in revenue losses associate with removing food from the sales tax base in places where such taxes exist. In addition, rural communities will receive an ongoing state appropriation to cover funds lost from the rural hospital tax. While such an arrangement will require some adjustments and doesn’t guarantee a 100% hold-harmless position, we appreciate that state policymakers were cognizant of municipal needs. Speaker of the House Greg Curtis and Senate Majority Leader Curt Bramble presented the proposal to LPC on Monday and in turn LPC unanimously endorsed the plan.

Consequently, we ask you to join the ULCT in ceasing our opposition to HB 282 with your legislators. We have come to an agreeable arrangement with the legislature and we want to work together in good faith to see that it is implemented. Please continue to stay engaged as we approach the final calendar week of the session and continue to adamantly oppose the land-use bills HB 233 and HB 334. While we think a deal is being negotiated to ensure that these two bills are also resolved to our liking (i.e. not passed) we want to ensure that our opposition is still present until such a time that the “deal” is finalized. This should take place within the next day or so, and we will be sure to keep you apprised of the issue as things change.

We appreciate your involvement on these issue and look forward to many more joint efforts to successfully “tell local government’s story” on Utah’s Capitol Hill.

Until Next Time....Enjoy.