Utah lawmakers are exploring major changes in tax policy, in part to provide more money for education. These deliberations are taking place under the threat of an initiative petition drive by Our Schools Now (OSN) to ask voters to increase income taxes.
Legislative leadership is hoping to change Utah’s tax structure by reducing tax rates while broadening the tax base to more people and entities. Will this provide additional funding for education and push back against OSN?
Pignanelli: "A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform." — Russell B. Long
Attending a family reunion of in-laws can be drudgery but necessary to promote household harmony. But the activity must be navigated with sensitivity and caution. There are risks everywhere. The potential of making enemies (i.e. too little attention paid to a relative) must be minimized to avoid long-term suffering. Similar perilous adventures plague tax reform actions.
The threat of OSN, combined with shrinking general fund sources, is compelling lawmakers into a comparable environment. They are delicately examining changes, which may incur animosity (sales tax back on food and restructuring the gas tax). Yet, the legislators are using this situation as an opportunity to reconfigure taxes for Utah to remain competitive.
Because of controversy, modifications to income taxes are likely to remain in discussion stages. Revamping sales taxes is probable, resulting in winners and losers. Advocacy groups from both categories — especially the latter — will be inundating the Capitol.
As with spending time with in-laws, any effort breeds goodwill. The Legislature can respond to OSN supporters that good faith actions are developing for comprehensive improvement. OSN supporters will be dissatisfied since anticipated reform does not generate enough immediate revenue for their concerns. Such sentiments reflect most family dynamics, whatever good one has performed is never enough.
Webb: It absolutely makes sense to broaden the tax base. Low rates spread over a broad base is the best and most sustainable tax policy. It was a major mistake to eliminate the sales tax on food. It should be restored and taxes due on online sales should certainly be collected. Tax credits, loopholes, exemptions and subsidies should be reviewed to broaden the tax base. The economy has changed, and tax policy must change with it.
But part of the tax reform goal must be to raise more money for education — now. Not just sometime in the future. If the Legislature doesn’t make real progress this session, the OSN group should move forward aggressively to gather signatures and place a proposal on the ballot so the people can decide.
Is Utah’s education funding crisis serious enough to require a significant tax increase and does the political will exist to raise taxes?
Pignanelli: Our astute state constitution authors mandated income tax receipts into the Uniform School Fund. This ensures a dedicated revenue source for Utah students. But the downside is the impossibility for politicians to increase income taxes. These payments are personal to taxpayers.
Utah's bigger share of families with children calculates into fewer dollars per student. So there is always a legitimate need and demand for more resources. But increasing income taxes is a political nightmare. Gov. Norman Bangerter almost lost re-election after pushing a temporary bump to address a public education crisis. Every politico know this.
Webb: The most basic and important component of Utah’s public education system is absolutely in crisis — the ability to attract and retain top-quality teachers by paying them a living wage. That crisis, alone, requires a major funding boost.
We have more children, on a percentage basis, than any state in the nation. We simply can’t educate them on the cheap. Nothing is more important to Utah’s economy and its future success than excellent education that prepares our young people for good jobs.
Utah employers already can’t find enough skilled workers in many fields. Employers won’t come to Utah or expand in Utah if we have extremely low taxes but don’t have qualified workers.
Note that OSN is led by hard-headed business leaders, not by traditional education advocates.
Should Utah aspire to become the top education state in the nation and is it even possible?
Pignanelli: Utah is consistently honored for how we conduct business, manage public funds and interact with each other. So we should focus the "Utah Way" on specific objectives.
Webb: If we really care about our children, if we are a family-focused state, we absolutely ought to aspire to be No. 1. Our young people can be our greatest asset or our greatest liability.
Massachusetts is arguably the top education state in the nation. Utah is pretty average. So what’s the difference? Are Utah schoolchildren dumber than those in Massachusetts? Are our parents less caring? Are our teachers less capable?
No. Here’s the difference: Massachusetts provides top-notch education because it spends $14,515 per pupil. Utah spends $6,555. Wow. What a contrast. Certainly, money isn’t everything. But money can hire great teachers, can provide early education, can provide excellent career guidance, can bring extra resources to struggling students.
I believe that Utah, with our family focus, strong demographics and collaborative spirit could become the nation’s No. 1 education state.
But we will never get there if we spend less per pupil than any state in the nation.