January 27, 2006

Utah gov. says tax relief effort gaining ground

By Jim Christie

SAN FRANCISCO (Reuters) - Utah Gov. Jon Huntsman Jr.
predicted on Friday that state lawmakers will back his tax
relief proposals after the state's revenue report next month.

Utah's economy is booming, swelling state coffers and
affording lawmakers the opportunity to roll back certain taxes,
the Republican governor told Reuters in a telephone interview.

"Two weeks from now we'll have a better sense of how we
resolve this," Huntsman said, referring to growing support in
the state's Republican-led legislature for his proposals.

Huntsman wants to end Utah's tax on food, imposed during
the Great Depression, and cut the state's personal income tax
rate to lure business to Utah, which neighbors states with low
and no income taxes.

"I think we'll be successful on both," Huntsman said.

Utah's House handed Huntsman a victory by voting on
Thursday by a wide margin for a bill to scrap the food tax. He
expects it to win over lawmakers in the state Senate who have
concerns that lost revenues from ending the tax could undermine
local governments that aim to issue sales-tax backed debt.

In response, Huntsman and allies amended his plan to allow
local governments to raise a local option tax to help offset
lost revenues.

Opposition should cease next month, Huntsman said, noting
he expects the state revenue report to underscore his view that
Utah can afford to lower taxes while at the same time raising
its spending and posting a considerable budget surplus.

Huntsman has proposed a 7 percent increase in spending to
$9.6 billion in Utah's next fiscal year. His budget would
include a record $3 billion in school spending, boost highway
spending by $120 million, position the state to issue $83
million in general obligation debt for road projects and
maintain a large surplus.

According to Utah's most recent outlook, it will collect
$344 million above an initial forecast in its current fiscal
year and $581 million above forecast in its next fiscal year.

The revenue surge may go on for some time, Huntsman said,
noting Utah is seeing a tourism boom, torrid home building and
rising demand for services from its fast-growing population.

"We're looking at 3.5 percent annual population growth,
which is about three times the national average ... From what
we've told by demographers, we're the fifth fastest growing
state," Huntsman said.

While the governor wants more businesses to open in Utah,
one type need not apply. Huntsman said he will oppose efforts
to allow more radioactive waste to be stored in Utah, a
challenge to lawmakers backing a plan to expand a landfill for
low-level radioactive waste.