Senate approves income-tax rate cut after heated debate over school funding

Senator McKay’s measure to lower the state income tax rate passed the Utah Senate on Feb. 10 after an extended floor debate and a failed substitute that sought to protect school funding.

The debate centered on whether the income-tax cut would necessitate local property-tax increases to make up lost revenue for school districts. A senator proposing a substitute said the amendment "would leave the point 05% tax income tax cut in place, but it would then implement a surtax on folks making over $1,000,000 annually, of 5.15%" to make the plan revenue neutral and "keep our school funding intact." The substitute motion was placed and then defeated on the floor.

Opponents warned the shift would create tiered tax treatment and could echo outcomes seen in other states. One senator said the approach was "working out miserably for the state of California" and called the substitute "not a friendly substitution." Supporters including Senator McKay argued Utah’s budget position and economic competitiveness justified the cut, noting the state is running a budget surplus and has record revenues in the income-tax fund.

Senator Fillmore detailed recent education appropriations and said "public education will be receiving a $190,000,000 funding increase" this cycle, citing additional teacher-pay and CTE investments as evidence the state can provide tax relief while funding schools.

After summations, the Senate took a roll-call vote. The clerk announced: "SB60, having received 22 yay votes, 7 nay votes, 0 being absent, passes this body and will be sent to the house for their consideration." The bill now moves to the Utah House for further consideration.

Next steps: The House will consider SB60; a committee or floor calendar date was not specified on the record.