Utah's citizenry will vote Tuesday on a measure that could have a profound effect on Southern Utah State College and all of the other public institutions of higher learning in Utah.
Initiative A on the ballot calls for the removal of state sales taxes on food. Utah's sales tax rate is 6 1/4 percent and sales taxes on food make up approximately 12 percent of the total revenue produced by the sales tax.Not all of the revenue from the sales tax goes to the state. A substantial portion goes to local cities and towns, and smaller amounts go to public transit and the effort to bring the Olympics to Utah.
The Utah Office of Planning and Budget estimates that the projected annual revenue loss will total $113 million, of which $90 million will come from the state, $18.4 million from cities and towns, and the remainder from public transit and the Olympics effort.
If the referendum removing the sales taxes on food passes, Utah's public officials have three basic options. The first is to cut the budget and eliminate services. The second is to raise other taxes to replace the food taxes, such taxes as property, corporate franchise, general sales, inheritance, investment income and the like,. The third option is to eliminate sales tax exemptions that were enacted because they were considered good for economic development and also because they give a high return on investment.
Gov. Bangerter has said that the only option he would consider should Initiative A pass would be to cut budgets and eliminate services and that is very bad news indeed for SUSC, for Cedar City, for health and human services, the courts and corrections, public safety, natural resources and a host of other government programs which derive funds from the sales tax on food.
Utah's system of public colleges and universities would lose $31 million. Our share of that cut at SUSC would be $1,336,700. Supporters of the removal of the sales tax on food contend that Utah's projected economic growth could be sufficient to offset the loss of the food tax and the cut the colleges and universities would have to endure could be as low as $6.4 million, with SUSC's share being $276,000.
But the fact is it will cost Utah an estimated additional $200 million next year to just cover inflation and population growth. That constitutes more than twice the amount of any projected economic growth.
In addition, the new federal tax package approved by Congress will cost the state millions of dollars, which will eat into Utah's economic growth, perhaps even ensure there is no economic growth at all.
The drastic cut in the college's budget would come at precisely the time when enrollment growth is shifting from public schools to higher education as children grow up and apply for college. It is estimated that by the year 2000, Utah's colleges and universities will have 20,000 more students than they have today.
How would SUSC be affected by such a huge budget cut? In reducing the size of the college, the number of students currently enrolled would have to be cut back and an enrollment cap imposed. The student body would have to be trimmed by upward of 371 students. Faculty and staff would also have to be laid off.
Such a hit at SUSC could be a severe blow to the local economy, which is only now emerging from the deep recession caused by the closing of the iron mines a decade ago. Not only would the college budget be cut, the lost revenue in the local area caused by the fewer students, faculty and staff would also be noticeable. Firms that are now struggling financially would not make it.
Then, too, there would be the need to replace the $172,847 to $260,000 that would be cut from the city's budget (16 percent to 24 percent of the revenue the city receives from its sales tax collection). Even if the state didn't increase its taxes to replace the lost food tax revenues, Cedar City would have to raise its taxes or put in jeopardy important city functions.
The problem with Initiative A is that it provides no mechanism to fix the crisis it creates. No one enjoys paying taxes, and taxes on food are particularly onerous. But merely cutting out the taxes without putting into place new revenues to replace those that are lost is not a responsible way to go.
It is important to remember that Utah ranks first in the nation in the number of young people who go to college. Further, Utah's young population continues to grow, in contrast with many other states where the number of young people is shrinking. This fact gives Utah the potential to be the nation's labor market for the future.
Indeed, Utah's greatest hope for the future rests in its educational system,. As a state, we can be in a unique position to grow and prosper in the 1990s if we are willing to continue to invest in education.
Our neighbor to the west, Nevada, has recently decided to increase funding for higher education on the premise that an expanded and improved higher educational system will attract new industries and create new jobs. In the last two years alone, Nevada has increased its higher education budget by 35 percent.
The supporters of the Initiative A are no doubt people pursuing what they believe to be an honorable cause. The problem is that if the initiative passes, they will have put into motion something they didn't intend and have no way of correcting.