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House reinstates construction-project sales-tax exemption in HB 274 after debate over school impacts
Summary
The House voted Feb. 24 to reinstate a sales-tax exemption for construction projects by local governments and school districts (HB 274). Sponsors said the prior removal hurt rapidly growing school districts; members adopted friendly amendments and passed the bill to the Senate.
The Utah House on Feb. 24 passed House Bill 274, restoring the sales-tax exemption for construction projects by cities, school districts and other political subdivisions. Sponsor Representative John W. Hickman said the bill corrects an error made in the prior session that shifted sales-tax revenue from local entities to the state and hurt rapidly growing school districts.
Representative Hickman explained the bill’s aim and credited Representative Valentine for friendly amendments designed to address concerns about subcontractors and the need for an audit trail. Representative Osterson described a local impact example, saying Jordan School District faced about $2 million in unexpected sales-tax costs after last year’s change; other sponsors called the current bill a fix to avoid similar local hardships.
Floor questions focused on the fiscal note and whether the estimate matched district-level impacts. Representative Hickman acknowledged that the fiscal note used the prior estimate and that the actual impact would vary by district. The House adopted the amendments on the pink/lilac sheets clarifying identification and invoicing procedures for exempt materials and passed HB 274; the bill will go to the Senate for their consideration.
