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Utah's tax revenue is up, despite and partially because of various COVID-19 policies and reactions. The Utah State Tax Commission's annual report, released Wednesday, showed a total revenue of $13.97 billion in the 2021 fiscal year — an increase of $3.26 billion, or 30.5% over 2020 revenue.
John Valentine, Utah State Tax Commission chairman, said it is the highest amount the state has collected for taxes in a fiscal year.
This significant boost in tax revenue, he said, could lead to changes during the upcoming Utah legislative session. Gov. Spencer Cox has suggested a food tax credit, and reducing income tax rates was suggested by another Utah lawmaker, Valentine said.
One major component of the increase is the extended tax deadline to July 2020, which pushed some income tax revenue into the 2021 fiscal year; the 2021 extension was shorter and kept the taxes within the same fiscal year. However, there were other factors, including growth in Utah's population and economy.
"We had a very robust increase in 2021 where we rebounded faster than the rest of the national economy. Our income tax rebounded significantly, and candidly, our sales tax really didn't have the big fall off that many places did," Valentine said.
He said that shortly before COVID-19 hit, the Utah tax code changed to include taxes on remote sales, which helped the state not lose sales tax revenue. Valentine said Utah saw a 300% increase in online sales during the fiscal year.
Federal stimulus money allowed people to spend more, which also benefited sales tax revenue. Currently, Valentine said, the state is up 8% in just sales tax, which is one of the largest state revenue sources along with income tax.
Another factor causing the increased tax revenue was $720 million collected in delinquent taxes, which Valentine said is higher than normal. He said the commission found that a lot of this amount was back taxes that people paid in order to refinance their home. The stimulus money gave people more cash, and interest rates were extremely low, which led more people to refinance their homes during the last fiscal year. When refinancing a home, people are required to release and pay any tax liens that were put on them from previous years.
The food tax credit suggested by Cox or reduced income tax rates suggested by others are among the options for use of the revenue that may be considered by the Utah Legislature in its upcoming session, which begins Jan. 18.
"The policymakers will be making choices as to how to restructure our tax code and to release burdens, and then how to spend significant increases in public education, higher education, public safety, health and human services. The governor's recommendations in all those areas have had significant increases to reflect the fact that we've got a change in the economy," Valentine said.
Of the 2021 fiscal year revenue, the report said that 49.2% was placed in the education fund, 21.2% in the general fund, 10.9% in the transportation fund, 16% in fiduciary funds and 2.6% in other funds.
Throughout this fiscal year there have been a lot of "surprises," Valentine said, because of changes in federal and state law, including some that are still in the process of being implemented.
One of the year's challenges for the tax commission has been addressing long lines at the Department of Motor Vehicles. Currently the goal is to get people in and out of the DMV in 20 minutes. They developed technology to transfer car titles online, but quickly had to develop an auditing system to make sure that the correct car price was reported.