Bill to phase in state severance tax program fails

Feb 5 2013 - 12:13am


SALT LAKE CITY -- State lawmakers are in no hurry to initiate a phase-in program of how state severance taxes are dealt with.

The House voted down a measure Monday that would have phased in a voter-approved constitutional measure from the November 2012 election to increase the amount of severance taxes that are placed in a state trust fund. The bill lost 35-38.

Severance taxes are tax money generated by gas, oil and mining. The state has a trust fund where those funds are set aside for a given community, including some of the Native American tribes. Voters approved amendment A on the ballot in November by a narrow vote, stipulating the state begin setting aside additional revenue July 1, 2016.

Sponsored by Rep. Jim Nielson, R-Bountiful, HB 63 would have allowed the state to phase in funding for the severance fund. The state will require that $33 million be put in the trust fund beginning in 2016.

Despite the time frame set by the vote, Nielson said the bill would help the state ease into the financial commitment.

"The reality is, on July 1, 2016, this amendment takes effect. We can choose to have our own version of the fiscal cliff, or we can kick the can down the road. This is an orderly transition to implement the will of the voters," Nielson said.

State lawmakers have been sounding a cautionary note in regard to tax revenue the entire session, based on potential deficits linked to fiscal matters in Washington, D.C.

Rep. Erik Hutchings, R-Kearns, said there will never be a day when a government has too much money and can easily adapt to changes.

"There will always be unfunded needs; that is not going to end. I have a simple question. How long do you wait? My experience is that your needs increase along with your income. It's always going to be painful," Hutchings said of the transition.

Rep. Joel Briscoe, D-Salt Lake City, said he was concerned about the potential impact of scaling back programs, because of diverting revenue away from the appropriations process.

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