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Committee backs bill to sequester revenue from passive federal tax changes until legislature acts
Summary
The committee recommended first substitute House Bill 216, which would sequester any additional revenue Utah receives from federal tax code changes into a restricted account until the Legislature votes to spend or return it.
The Senate Revenue and Taxation Committee voted to forward first substitute House Bill 216 to the floor with a favorable recommendation. The bill requires that revenue Utah receives solely because of changes in the federal tax code be placed in a sequestered account and only released after a legislative vote.
Representative Thirsk, sponsor of the bill, said the measure responds to a 2017 federal tax change that altered Utah’s definition of taxable income and produced what she described as a “passive tax increase” to the state. She said the bill would prevent future, automatic increases caused by federal action without legislative approval: “if the federal government makes a change to the tax code in a way that creates a tax increase to Utah’s citizens that we did not vote for as a legislature, then that money will be sequestered in an account and that we will have to take a vote as a legislature,” Representative Thirsk said.
Under the bill, state officials would monitor federal changes, alert the Legislature when there is revenue attributable to federal action, and place the revenue into the sequestered account. The Legislature would then vote either to appropriate the funds or to return them to taxpayers. Representative Thirsk said the proposal is intended for transparency so that changes in federal law do not create “passive” state revenue increases without legislative action.
During public comment, Leah Hansen of Saratoga Springs said she supported the bill. Another online commenter, Cale Westin, said he favors greater transparency and noted other federal and state legislative options; he mentioned HR1 and said states can work with federal reforms. There were no technical questions left unresolved in committee discussion, and Senator Harper moved to pass the first substitute; the committee approved the motion 3–0.
The committee record indicates the bill establishes a monitoring and notification process through existing agencies but did not specify a dollar threshold for triggering sequestration in committee remarks; Representative Thirsk said the legislative fiscal analyst and tax commission would be involved in identifying affected revenue.
The bill advances to the Senate floor.
