Oct. 20--As state officials grapple with a possible $850 million budget shortfall for the coming year, advocates for Utah's cash-strapped families hope lawmakers will seek to increase revenue before they ax critical programs.

One option may be to remove tax exemptions Utah has given gas and oil companies since the late 1980s when oil sold for $13 per barrel, they say. Today's prices are six times that much.

Due to these exemptions, state coffers missed out on $84 million in 2007 and $160 million in 2008, says Allison Rowland, budget director for the nonprofit Voices for Utah Children.

"It's a good amount of money -- I can't see any reason to not shut down those incentives," Rowland said. "It makes no sense to essentially

give away some of the state's natural resources."

Industry representatives, though, along with a number of Utah's conservative lawmakers say that higher taxes are rarely, if ever, the solution to budget woes. Tax increases, they say, could be counterproductive by discouraging economic activity and costing jobs.

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Severance tax variables -- States vary widely in their policies on severance tax, which can be levied on any nonrenewable natural resource extracted from the ground -- beyond oil and gas, this includes sand, gravel, salt, magnesium chloride, coal and precious metals.

Utah's severance tax on oil is 3 percent of the value of the oil up to $13 per barrel, and 5 percent of the value above $13, according to Craig Sandberg, director of the State Tax Commission's auditing division. Natural gas tax is 3 percent up to $1.50 per 1,000 cubic feet and 5 percent above that value.

Utah exempts three categories of oil and gas wells: stripper wells that produce less than 20 barrels per day, "wildcat" or exploratory wells in their first year of production and development wells for the first six months.

Several states tax coal, but Utah gives that industry a free pass. Sen. Gene Davis, D-Salt Lake City, this year sponsored legislation to tax coal at 50 cents per ton, but the measure died without a committee hearing.

Low-income advocates are urging state decision-makers to think in new directions. Some suggest following in Sarah Palin's footsteps.

As Alaska's governor, the GOP firebrand signed legislation in 2007 that bumped the state's oil and gas levy to 25 percent, a rate that makes Utah look like a well-digger's haven.

"We're asking for maybe [a] 10 percent" levy, Linda Hilton of the Coalition of Religious Communities told colleagues at the state's annual Poverty Summit earlier this month.