Proposed transportation tax hikes raise ire — while UTA reorganization now seems settled

A major overhaul of the scandal-scarred Utah Transit Authority no longer appears controversial. But what is contentious are several tax increases in the same massive bill that seeks to plan the future of Utah transportation.

Even some taxes seemingly designed to avoid problems with local taxpayers in an election year — by instead targeting out-of-state visitors with higher taxes on hotel rooms and rental cars — brought plenty of opposition on Monday.

Still, the Senate Transportation Committee voted unanimously to endorse SB136, and sent it to the full Senate for consideration.

But Committee Chairman Gregg Buxton, R-Roy, warned, “This is a bill in process,” and plenty of work is needed, especially on proposed taxes. Several members warned they will not vote for the bill in the full Senate unless many of the currently proposed taxes are lowered or removed.

Among the most controversial is a proposal to raise registration fees on electric vehicles from $44 to $194, and the fees on hybrid cars to $65.

Sen. Wayne Harper, R-Taylorsville, the bill’s sponsor, said such vehicles escape all or much of the state gasoline tax now. The higher registration fees are designed to be about what similar gasoline-powered cars would pay in gas tax, and would help ensure that the electric vehicles pay their fair share to maintain highways.

But some groups and lawmakers argued it would take away any financial incentive to buy higher-cost alternative-fuel vehicles at a time Utah is trying to reduce air pollution.

Ashley Soltysiak, director of the Utah chapter of the Sierra Club, said less than 1 percent of Utah cars are now electric.

“Yet the bill proposes to tack on the third-highest fees in the nation for these vehicles,” she said. “This sends the wrong market signal about the importance of electric vehicle adoption and the imperative we have to clean up our dirty air.”

Sen. Jim Dabakis, D-Salt Lake City, agreed — and proposed an amendment to eliminate those higher registration fees. Harper opposed it, saying he’s still negotiating changes and it is too early in the process to totally eliminate them.

After Sens. Karen Mayne, D-West Valley City, and Jake Anderegg, R-Lehi, warned they would not vote for a final version of the bill with such high fees, Dabakis withdrew his amendment — saying it sent its message, and he expects that negotiations will eventually lower or remove the higher fees.

Also controversial are proposals to double the tax on rental cars and raise a tax on hotel rooms by more than nine-fold to help fund mass transit and highways. The car rental tax would go from 2.5 percent to 5 percent. The hotel room tax would go from 0.32 percent to 3 percent.

Kaitlin Eskelson, executive director of the Utah Tourism Industry Association, said that would make Utah taxes much higher than surrounding states, and could send conventions and visitors elsewhere.

For example, the room tax in Park City would be 15.45 percent and it would be 15.28 percent in Salt Lake City. She said competing areas are lower, including 9.8 percent in Vail, Colo., and 8 percent in Jackson, Wyo. — and 12.57 percent in Phoenix and 12.5 percent in San Diego.

“Our travelers are very savvy,” she said. “We don’t want to give them any reason to not choose Utah.”

Billy Hesterman, vice president of the Utah Taxpayers Association, also questioned if it is fair to raise hotel room tax for transportation. Harper insisted it is a user fee, because people going to hotels use roads.

Ed Fowler, representing Enterprise rental car, said that industry already pays the highest sales taxes in the state. He said they total 16.35 percent now, and when airport fees and taxes are added they rise as high as 42 percent. He also said two-thirds of people who rent cars in the state actually live here.

Also controversial in the bill is a proposal that if counties don’t raise their local sales taxes for transit and transportation to the full penny per dollar allowed, the state in 2022 will automatically impose it.

“We already voted on this. We said no,” complained George Chapman, a former Salt Lake City mayoral candidate referring to how taxpayers in Salt Lake and Utah counties in 2015 rejected Proposition 1 to raise such taxes because of mistrust of UTA.

“Let us not forget that UTA is $2 billion in debt,” said Heather Williamson, Utah director of Americans for Prosperity. “And this is after years of controversy over ridiculously high salaries for executives, lots of expensive international travel, sweetheart deals with certain developers [and] being investigated by the federal government.” She opposed the tax hike. The bill aims to reorganize UTA to rebuild trust after past problems.

It would replace its part-time, 16-member board with a full-time, three-member commission to better watchdog the organization.

UTA Board member Bret Millburn, who is also a Davis County Commissioner, said the agency now supports that. “We want to continue to partner because we see the big picture” of what transit means to Utah’s future.

Another large change in the bill would allow state highway funds also to be spent on UTA projects. No one opposed that, while UTA, counties, cities and others said it is needed to help solve problems as Utah’s population grows.

Carlos Braceras, executive director of the Utah Department of Transportation, said, “In the next 30 to 40 years, we are going to double our population. In this urbanized area, we are not going to double the lane miles that we’re going to build,” so UTA transit will become increasingly important.