Gov. Spencer Cox entered office in 2021 with a promise to slash taxes. And during his first term, he cut $1.2 billion, which he said is “more than any administration in our state's history.”
Cox floated another tax cut while unveiling his $30.6 billion budget recommendations for the 2026 fiscal year at the William E. Christoffersen Salt Lake City Veterans Home on Dec. 5.
The governor called it an embarrassment that Utah is one of nine states that tax Social Security benefits. And while Utah has rolled back some social security taxes, he said there’s an opportunity to do away with them for good.
“This will help the most vulnerable in our state, our seniors, especially those living on a fixed income,” he said. “We can do this, this year and I think we have a moral obligation to.”
Other parts of his budget wishlist want to, yet again, funnel more money into education and bolster the state’s energy production. He tipped his hand earlier on that priority with the announcement of Operation Gigawatt. The goal is to double in-state energy production within the next decade.
Social Security tax cut
On average, Cox said cutting Social Security taxes would save about $900 to $1,000 a year and benefit roughly 150,000 seniors. To him, it’s the right move instead of a marginal reduction in income tax for all Utahns like he has advocated for in the past.
“We could do another five basis point increment and save you and me $15 a year, or we could save my grandma $1,000. I think it's an easy call.”
Cox emphasized the need to accommodate Utah’s aging population. While it is still the youngest state in the nation, the number of Utahns aged 65 or older is expected to double by 2060.
The tax cut, however, cannot be done without approval from the Utah Legislature.
It’s unclear if lawmakers will support slashing a modest $143.8 million from income tax revenue. The Legislature has attempted to gain more control over how income tax dollars are spent, but that requires a change to the state constitution approved by voters. Currently, lawmakers can only constitutionally spend income tax – the largest bucket of money available to the Legislature – on education and some services for children and people with disabilities.
Lawmakers proposed a constitutional amendment for this year’s election to remove the earmark on education to free up income tax dollars. In return for its passage, the Legislature would have removed the state portion of the sales tax on groceries. However, due to misleading language and failure to publish the amendment language in newspapers, courts voided the amendment. Lawmakers have to wait until at least 2026 to try again.
There haven’t been in-depth talks about the possibility of eliminating the Social Security tax in its entirety, the governor acknowledged. Lawmakers could opt to phase out the tax, similar to what is happening in West Virginia.
“That's where negotiations come in and we'll certainly have those,” Cox said. “That's better than nothing, but my proposal is better than that.”
Double in-state energy production
The governor has become increasingly passionate about Utah’s energy situation.
“Utah can lead the nation in energy production,” he said. “We should not only have plenty of low-cost energy for the people who live here in Utah, but we should be able to export that low-cost energy to other states and other nations.”
To meet Operation Gigawatt’s goals, Cox is urging lawmakers to approve $20 million for nuclear energy development and $4.2 million for geothermal. However, that initial funding wouldn’t kick-start the construction of energy plants or production. It would fund site selection and site preparation.
He hopes the money the state is willing to pour into geothermal and nuclear will attract the private sector investment to build the necessary facilities to “make sure that we have the energy we need for the future.”
Education investments
Lt. Gov. Deidre Henderson took over the podium to announce the administration's hope of allocating $7.1 million to provide free school lunches for students who qualify for reduced lunch. That proposal would benefit the 32.3% of Utah school children who took advantage of the free or reduced lunch program in 2023.
Cox also recommended an increase of $760 million in K-12 education funding, including a 4% raise to the amount of money the state spends per student, also known as the weighted pupil unit.
They also want to give teachers more money. Cox hopes the Legislature will approve $75 million for paid preparation time and $8.4 million in reimbursements for school supplies.
“No teacher should ever have to pay for those supplies out of pocket, and we want to make sure that that doesn't happen,” the governor said.
Each year since Cox took office there has been an uptick in the total amount of money the governor has pitched for the budget.
- $21.7 billion budget for 2022
- $24.9 billion budget for 2023
- $28.4 billion budget for 2024
- $29.5 billion budget for 2025
- $30.6 billion budget for 2026
Sophia DiCaro, executive director of the Governor’s Office of Planning and Budget, said there wasn’t a surplus of money to fulfill the 2025 fiscal year budget.
“We actually had a little bit of a deficit at the close of the fiscal year,” she said during a Dec. 4 budget briefing with reporters. “It was very, very small. $7 million or so in the grand scheme of things.”
Due to projections that show revenue will be up compared to previous post-pandemic years, $324 million of new money went into this budget, DiCaro said. There is optimism in the budget office and with the governor that the Utah economy is “normalizing toward a more steady state.”
